Thursday, February 28, 2013

Extraction Taxes -- State-by-State Comparisons

The Dickinson Press is reporting
A comparison of effective oil tax rates in fiscal year 2010 of the top eight oil-producing states in the U.S. found that North Dakota had the fourth-lowest rate. Here is the ranking of the rates, with the total taxable value of oil production in each state in parentheses.
1. California — 2.5 percent ($15.2 billion)
2. Oklahoma — 6.7 percent ($11.1 billion)
3. Texas — 7.9 percent ($49.4 billion)
4. N. Dakota — 9.8 percent ($6 billion)
5. Montana — 10.7 percent ($2 billion)
6. Louisiana — 10.9 percent ($8.6 billion)
7. Wyoming — 13 percent ($8.3 billion)
8. Alaska — 25.1 percent ($14 billion)
Source: Covenant Consulting Group study commissioned by the North Dakota Department of Commerce.


  1. 1. Oil and gas are often taxed differently.

    2. Lots of exemption and credits. Alaska credit for new exploration. Exemptions and lower rates for horizontals etc.

    3. See the rates in Canada on that list.

    4. CLT/Hamm lobbyist claimed 3 years ago that the boom would end without lower taxes. Lobbyist later appointed to CLT BOD, where he is paid a small fortune (see CLT documents).

    5. There is no rational, sensible, philosophy behind the old tax or new one.

    6. They have no idea what they are doing.

    7. They are just regurgitating talking points.

    8. Sell the service companies and western ND short in 2016, when land is HBP and drilling in 2016 instead of 2017 reduces IRRs by a huge amount. They catch up with the boom and immediately have a bust.

    9. As clueless as CA.

    10. As clueless as Detroit.

    Just first thought off the cuff. Have they thought about any of this?

    anon 1

  2. It looks like this will put us on par with texas who is by far the greatest competitor for investment dollars. Also if I was an executive and I knew corporately me and a few of my friends could meet and sustain a million barrels of production then I might place my extra investment in North Dakota so that I can increase my return by 2 percent before 2017. This spring may be more interesting than expected.

    1. It's very interesting. See "anon 1"'s note above. Once the leases are held by production, the oil companies have a lot of options. And much will depend on taxes. But taxes are just part of the overall picture. Having said that, the inability of some senators to see the advantage of lower extraction taxes reminds me of the fable, "The Golden Goose."

      I think it is easy to forget that oil companies are "E & P" companies: exploration and production. They need to balance "E" and "P." KOG has that problem, and to some extent, OAS.