West Texas Intermediate Crude Oil Price
ELIMINATION OF OIL INCENTIVES FOR 3rd QUARTER 2008
According to MCA 15-36-303(22) and 15-36-304(6)(c)(d), if the average price of west Texas intermediate crude oil is equal to or greater than $30 a barrel for stripper oil or more than $38 a barrel for the stripper exemption, then some existing oil incentives are eliminated for that quarter. The average price for a barrel is computed by dividing the sum of the daily prices for west Texas intermediate crude oil as reported in the Wall Street Journal for the calendar quarter by the number of days on which the price was reported in the quarter. The oil incentives eliminated include reduced tax rates for stripper oil, incremental secondary production and tertiary production. The stripper exemption is also eliminated and the stripper exemption production is to be filed as stripper bonus production.
The average Wall Street Journal price for the quarter ending December 31, 2008 is $58.7192, which exceeds the benchmarks for the above mentioned oil incentives. The tax rates for stripper oil, stripper exemption, incremental secondary production, and tertiary production for 4th quarter 2008 working interest owners will be:
Pre-1999 wells Post-1999 wells Stripper Bonus Pre or Post 1999
This means that all oil leases that would normally have been filed on the O-STRIP schedule for the quarter ended December 31, 2008 will need to be filed on the O-REG schedule. The only oil production that can be reported on the ENH-INCR schedule would be the recompleted horizontal 0-18 months. The secondary and tertiary oil production for the quarter ended December 31, 2008 must be reported on the O-REG schedule. The OSTRX3 will be used and all working interest value will be filed in column J, as bonus production.
The non-working interest owner or royalty tax rate of 15.06% is not affected by the elimination of oil incentives.
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