ADMINISTRATIVE NOTICE 92-05 SUBJECT: Property Tax -- State Tax Commissioner's Policy Statement for the Determination of Oil and Gas Operating Expenses for Property Tax Purposes for Tax Year 1992, Pursuant to §1101J-4.5.
On July 1, 1991, the Department of Tax and Revenue filed valuation variables to be used in conjunction with Legislative Regulations for the appraisal of oil and gas properties (See 110 CSR 1-J-1 et seq.). These variables were amended and refiled on December 26, 1991. This notice will address one of the variables, oil and gas operating expenses setting forth procedures used in developing these expenses and their application against receipts for the working interest of oil and gas producing properties. The Department mailed questionnaires to major oil and gas producers in an effort to solicit, among other data, information concerning annual operating expenses incurred in operation of oil and gas wells. In addition, the Department reviewed regulatory reports for operating expenses incurred by various regulated public service corporations in the oil and gas business. The Department has developed the following criteria for operating expenses as a result of this research activity: Operating expenses (excluding taxes, royalty and overriding royalty expenses) will be estimated to be 25% of gross receipts not to exceed: Gas (Year 1) $6,800 Gas (Year 2) 6,200 Gas (Year 3) 6,100 Oil (Year 1) $8,100 Oil (Year 2) 7,400 Oil (Year 3) 7,300 Oil (enhanced recovery) $8,255 Operating expenses shall be deducted from working interest receipts (after production decline) to develop a working interest income series for yield capitalization purposes. For additional information concerning oil and gas annual operating expenses see § 110-1J-1 et seq. or call the Department of Tax and Revenue at (304)348-3940.
Issued: January 29, 1992 Department of Tax and Revenue Operator on Duty 8:30 am - 4:00 pm Property Tax Division Monday through Friday P. O. Box 1345 Phone: (304)348-3940 Charleston, WV 25325-1345 FAX: (304)
348-2324