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  1. Default Oklahoma business energy news

    Quote Originally Posted by onthestrip View Post
    More talk about the drilling tax. More comments that contradict the claims that Oklahoma's rock isnt the best and drilling is too expensive here.

    Fourth Reading: Oil industry isn?t going away | The Journal Record
    What they said. Basing the reasoning for a tax increase on the potential of one play as portrayed in a presentation that's purpose is to pump up the play to investors isn't a great strategy. Continental hasn't drilled that many wells in it yet and results haven't been as good as Continental's throughout the entire play. Like adaniel said, Sandridge, CHK, shell and others said the Mississippi play in Kansas was going to be an excellent play and now they have either sold out or are letting large portions of their acreage expire.


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  2. #177

    Default Re: Oklahoma business energy news

    Quote Originally Posted by PhiAlpha View Post
    What they said. Basing the reasoning for a tax increase on the potential of one play as portrayed in a presentation that's purpose is to pump up the play to investors isn't a great strategy. Continental hasn't drilled that many wells in it yet and results haven't been as good as Continental's throughout the entire play. Like adaniel said, Sandridge, CHK, shell and others said the Mississippi play in Kansas was going to be an excellent play and now they have either sold out or are letting large portions of their acreage expire.


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    The bottom line is that none of them will leave profits in the ground. I support 9%. After a week, they won't bat an eyelash.

  3. #178

    Default Re: Oklahoma business energy news

    It's all just posturing on both sides. It'll wind up around 3.25-4%.

  4. Default Re: Oklahoma business energy news

    Quote Originally Posted by zookeeper View Post
    The bottom line is that none of them will leave profits in the ground. I support 9%. After a week, they won't bat an eyelash.
    Again depending on the play, raising it that high could make it less profitable thus leaving it in the ground longer or not drilling it at all. 9% is too high...that would definitely hurt the more marginal plays in the state, the trickle down effect would hurt the mineral owners in those areas. It definitely should not go above 7% and will probably end up between 3-5%


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  5. Default Re: Oklahoma business energy news

    Quote Originally Posted by onthestrip View Post
    More talk about the drilling tax. More comments that contradict the claims that Oklahoma's rock isnt the best and drilling is too expensive here.

    Fourth Reading: Oil industry isn?t going away | The Journal Record
    To further what I said in my previous post. Why does it make sense to use economics from the best play in the state as a case for raising the tax? Sure, assuming continental's predictions for SCOOP are correct, jacking it up may not hurt companies developing that play. But what about the plays that, even right now, are marginal at best and/or extremely inconsistent? The miss, granite wash, and various western Oklahoma plays can be extremely inconsistent and extremely expensive to drill regardless of those results. A horizontal well in one section could produce 400 BOEPD while one a mile away produces 20 BOEPD. A 6% tax increase may not make much of a difference on a 400 BOEPD well but on a well producing less than 100 BOEPD, it could definitely be the difference between profitable and unprofitable. Back to the large company/small company discussion, that may not be as big of hit for a large company that drills 30 wells a year in the area as their production results would likely average out over a larger area or drilling program. For a smaller company that can only drill 3 wells a year in that play, an increased tax would definitely increase their risk.

    And I can't state enough that until PROVEN otherwise, "our rock" is not as good or consistent over a large area as North Dakota's and definitely is not as liquids-rich as marquee areas in Texas such as the Eagleford Shale and the Permian Basin. All you have to do is look at production numbers, decline curves, and rig counts to see that. Maybe we'll find in the future that the SCOOP is indeed the next Bakken but right now that hasn't happened yet and using the success of one part of the state as an excuse to tax the s*#% out of everyone is not the way to go.

    Having said that, I'm not necessarily against raising or modifying the tax but the attitude of "all the oil companies are robbing everyone and attempting to screw over the entire state" that some of you have taken up is frac'ing ridiculous. The issue is not anywhere near as simple as some of you would like it to be. A careful, well thought out discussion needs to take place and that seems to be what's happening. I'm glad their are groups within the industry fighting on both sides of the issue, it should continue to be a solid, fact based discussion.


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  6. #181

    Default Re: Oklahoma business energy news

    •A plan for permanently setting Oklahoma’s gross production tax rate at 2 percent for the first 48 months on all new oil and gas wells, followed by a 7 percent tax rate for the remainder of each well’s production.
    Several key issues are unresolved as Oklahoma Legislature speeds to adjournment | News OK

  7. #182

    Default Re: Oklahoma business energy news

    Man PhiAlpha just owns this discussion with thought out and knowledgable viewpoints, in a civil manner.

  8. #183

    Default Re: Oklahoma business energy news

    Aye yi yi....

    A bill is going to be considered by House and Senate panels that would have the drilling tax at 2% for first 3 years, 7% after that. So not only do we prove that corporations are essentially dictating their own tax policies, we didnt even try to negotiate. The state basically just took the oil and gas industry's first proposal. First rule of negotiations is to never take the first offer, right? But you cant expect this current group of lawmakers to look out for anyone other than who might write their next campaign check. No foresight or backbone has been shown by our state leaders. Our pitiful education and health status gets to continue on.

    Okla. lawmakers to unveil new drilling incentive - San Antonio Express-News

  9. #184

    Default Re: Oklahoma business energy news

    Quote Originally Posted by onthestrip View Post
    Aye yi yi....

    A bill is going to be considered by House and Senate panels that would have the drilling tax at 2% for first 3 years, 7% after that. So not only do we prove that corporations are essentially dictating their own tax policies, we didnt even try to negotiate. The state basically just took the oil and gas industry's first proposal. First rule of negotiations is to never take the first offer, right? But you cant expect this current group of lawmakers to look out for anyone other than who might write their next campaign check. No foresight or backbone has been shown by our state leaders. Our pitiful education and health status gets to continue on.

    Okla. lawmakers to unveil new drilling incentive - San Antonio Express-News
    Is there not a way to split the way the companies are taxed so that the larger companies can pay more since their results even out and the smaller companies aren't left with a bunch of unprofitable wells? I think three years is too long to have the rate at 2%.

  10. Default Re: Oklahoma business energy news

    Quote Originally Posted by Hemingstein View Post
    Is there not a way to split the way the companies are taxed so that the larger companies can pay more since their results even out and the smaller companies aren't left with a bunch of unprofitable wells? I think three years is too long to have the rate at 2%.
    It currently, until 2015, is 4 years at 1%. It's probably not set in stone just yet.

  11. #186

    Default Re: Oklahoma business energy news

    More: Oil Firms? Reports Strike Different Tone than CEOs? Warnings on Production Tax | Oklahoma Watch

    From Tom Ward
    “I have overseen the budgeting process of drilling thousands of wells at two different companies in Oklahoma. In the process of drilling a well, there were many factors that are considered. However, the implication of a state’s gross production tax has never had a material impact on whether to drill or not drill,” Ward said in an email.

    “The intent of the Oklahoma gross production tax holiday has outlived its purpose of subsidizing the experiment of horizontal drilling … The tax holiday had an expiration for good reason and was never intended to create a long-term entitlement for the industry.”

  12. #187

    Default Re: Oklahoma business energy news

    That's interesting.

  13. #188

    Default Re: Oklahoma business energy news

    Update on the tax proposal

    A bill that would set the gross production tax rate on oil and natural gas wells at 2 percent for the first 36 months of production is expected to reach the state House of Representatives late Wednesday or early Thursday.

    House Bill 2562 would affect the early production of vertical and horizontal wells throughout the state. After three years, the wells’ remaining production would be taxed at 7 percent.

    The bill on Tuesday was approved by conference committees in both chambers. The Senate committee approved the bill after 7 p.m. Tuesday.

    The full House must wait 24 hours before taking up the measure.

    The bill would eliminate drilling tax credits, including those for the state’s deepest wells and for three-dimensional seismic activity.

    “It’s a good compromise between where we were and where the Legislature felt like they needed to be,” said Chad Warmington, president of the Oklahoma Oil and Gas Association. “We’ve given in on the rate and duration, but we get out of it a tax code that is much more simple and much more permanent. We’ve eliminated a lot of pages of outdated incentives. Now we have a tax code that is very simple to understand.”

    Opponents, however, said the tax rate still is too low for too long.

    “We think the current plan is still a bad deal for the state,” said David Blatt, director of the Oklahoma Policy Institute.

    “We need to strike a balance between what is a reasonable tax rate and what is able to generate critical revenue to fund essential state services. There hasn’t been a compelling argument made for why this tax break should be extended at the 2 percent rate for a full three years. That’s still far more generous than other states offer. We believe that Oklahoma can tax production at its tradition 7 percent rate and still be a very attractive place to invest and still provide for schools and public services.”

    - Gross production tax bill heads to Oklahoma House after panels' approval | News OK

  14. #189

    Default Re: Oklahoma business energy news

    Interesting stuff in todays Journal Record. As far as Devon, CHK, Continental moving drilling to other states, Stacy Schusterman is calling BS.
    On Monday, Schusterman offered to take over the oil plays in Oklahoma if Devon Energy, Chesapeake Energy and Continental Resources decided higher taxes made it too expensive to drill, she wrote in a letter to the Oklahoma Senate president pro tempore and the speaker of the House.
    Full article:
    Industry divided on drilling taxes | The Journal Record

  15. #190

    Default Re: Oklahoma business energy news

    It passed the House. Senate votes this afternoon.

  16. #191

    Default Re: Oklahoma business energy news

    Headed to governors desk. Hooray for letting industry write their own tax policy!

    Maybe I'll I buy some CLR and Devon stock to offset my disappointment in the state.

  17. Default Re: Oklahoma business energy news

    Quote Originally Posted by onthestrip View Post
    Headed to governors desk. Hooray for letting industry write their own tax policy!

    Maybe I'll I buy some CLR and Devon stock to offset my disappointment in the state.
    A lot of folks are dancing in the streets.

  18. Default Re: Oklahoma business energy news

    Quote Originally Posted by Bellaboo View Post
    A lot of folks are dancing in the streets.
    1%ers...

  19. #194

    Default Re: Oklahoma business energy news

    If you work in the industry or not, there is no way around it but we are being screwed as tax payers. I have no doubt this will pass and they will continue to pay a lower tax rate than you and I do. There is no exaggeration that we have some of the worst roads, underfunded schools, and infrastructure in the entire nation.

    Not only do we pay a higher tax rate than oil and gas drillers, there have been numerous spin off cost -
    -we have to pay higher water rates because municipalities are raising rates because of increased demands
    -the added wear and tear on infrastructure from truck traffic to and from well sites
    -added homeowners insurance year cost and deductibles for earthquake insurance
    -depletion of ground and surface water
    -possible contamination clean up cost down the road

    Good old fashioned privatized profits and socialized expenses. The only people I could possibly imagine that are content with this new change are short term employees who have no desire to stay in the state long term, they are here for the good times and will move on to the next site well before the chickens come home to roost. For those who want to say, ' you just want to bleed them dry', what, by having them pay atleast a little closer to the same rates that you and I pay, or somewhat closer to what they pay in other states.

  20. Default Re: Oklahoma business energy news

    Quote Originally Posted by TheTravellers View Post
    1%ers...
    Nope, there are a ton of folks that are mineral owners who are not 1%ers.

    And the more money those mineral owners receive is more state income tax paid.

  21. #196

    Default Re: Oklahoma business energy news

    Quote Originally Posted by Bellaboo View Post
    Nope, there are a ton of folks that are mineral owners who are not 1%ers.
    I've mentioned it on here before but my family has been in the state since 1895, and i actually have fractional well ownership down in SE Oklahoma. How is any of this benefiting us, they are going to drill whether the rate is 2 percent or 5 percent (imho that seems reasonable) and as long as nothing crazy was proposed.

    This isnt like manufacturing cars that can be built anywhere. You cant drill oklahoma gas and oil in texas or north dakota, its been here for millions of years and isnt going anywhere unless someone wants to get it out.

    What we are doing is purposely missing out as a state to do something responsible and long lasting with the biggest limited asset we have.

  22. #197

  23. #198
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    Default Re: Oklahoma business energy news

    Long term it becomes irrelevant to worry about where to set the tax on oil companies, if the Republican goal to eventually totally eliminate the state income tax means corporate income tax as well.

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    Default Re: Oklahoma business energy news

    So raising the tax on horizontal drilling is unconstitutional, due to not enough legislators from both sides voting in favor. Taxpayers will be left with the legal bills again, if it's challenged and fought. The governor doesn't seem to view it as an issue. Or like the Bible, pick and chose what you want to follow in the Oklahoma Constitution.

  25. #200

    Default Re: Oklahoma business energy news

    She signed it

    Fallin Signs Bill To Adjust Oklahoma Oil Production Tax

    Posted: May 28, 2014 2:40 PM CDT
    Updated: May 28, 2014 2:42 PM CDT
    By Associated Press


    OKLAHOMA CITY - Gov. Mary Fallin has signed a bill that increases an incentive for a 1 percent tax rate on horizontally drilled oil and gas wells to 2 percent and extends it to all wells drilled in Oklahoma.
    Fallin signed the bill Wednesday after negotiations between the energy industry and the Republican-controlled Legislature.

    - Fallin Signs Bill To Adjust Oklahoma Oil Production Tax - News9.com - Oklahoma City, OK - News, Weather, Video and Sports |

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