What crude oil severance tax exemption levels applied in Kansas from May 1997 through April 1998?

Plain-English summary

This annual crude oil severance tax notice sets the exemption levels for the fiscal period May 1, 1997 through April 30, 1998.

Under K.S.A. 79-4217, since 1987 the oil exemption -- in number of barrels -- depends on the average price per barrel paid by first purchasers for the six months ending December 31 of the prior year. The Secretary determines that price by April 15 each year from U.S. Department of Energy data, and it governs the following May-April period.

The determined average price was $21.98 per barrel. Because it is more than $16.00 and less than $24.00, the exemption amounts were:

• Low production wells: exempt if five (5) barrels per day or less.
• Water flood wells (2,000 ft or more): exempt if six (6) barrels per day or less.

The notice carries no printed notice number (indexed as Notice 97-0430) and expired April 30, 1998; the levels are recomputed every year, so check the current annual notice.

What this means for you

If you produced crude oil from a low-output or water-flood Kansas lease during May 1997-April 1998, these barrel thresholds set whether your production was exempt from severance tax that year. Because the exemption resets annually with the average oil price, this specific notice is expired -- use the current year's oil-exemption notice.

Common questions

Q: What oil price set the 1997-98 Kansas severance exemption levels?
A: A determined average of $21.98 per barrel, which (being over $16 and under $24) yielded exemptions of 5 barrels/day for low production wells and 6 for water flood wells.

Q: Is this notice still in effect?
A: No. It applied only to May 1, 1997 through April 30, 1998 and has expired; the exemption levels are recomputed each year based on the average oil price.

Citations and references

• K.S.A. 79-4217(b)(2)(B) and (E) (low-production and water-flood oil severance exemptions)
• K.S.A. 79-4217(d) (annual average-oil-price determination by April 15)

Subject

Exemptions for Oil Production, May 1997 through April 1998

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: Notice 97-0430

Original ruling text

Notice
Notice Number:
Tax Type: Mineral Severance Tax
Brief Description: Exemptions for Oil Production
Keywords:
Effective Date: 05/01/1997
Does this document
represent current
KDOR policy?
Expiration Date: 04/30/1998

Body:

 TO: Kansas Oil Producers and Purchasers

 FROM: John LaFaver
 Secretary of Revenue

 DATE: May 21, 1997

 RE: May, 1997 through April 1998, Exemptions for Oil Production



 The 1987 Kansas Legislature approved new oil exemption criteria for "low production wells" and for "water flood" wells with
 a depth of 2000 feet or more (See KSA 79-4217(b)(2)(B)and(E). Specifically, since May, 1987, the oil exemption amount in
 number of barrels depends on the average price per barrel paid by the first purchaser of crude oil for the six-month period
 ending December 31 of the preceding year. The Secretary of Revenue is to obtain the necessary data from the United Stated
 Department of Energy and determine the average oil price by April 15 of each year. The average oil price will then be used to
 determine oil exemption amounts for the following twelve-month period commencing May 1 of that year through April 30 of
 the following year. (See KSA 79-4217(d).

 Following are the first purchaser statistics obtained from the Petroleum Marketing Division, Office of Oil and Gas, Energy
 Information Administration of the Department of Energy:
                                                          Data in Thousands
       Report Period                    Cost                      Barrels             Average Price
          1996 Jul                    $67,495                      3,414                  $19.77
         1996 Aug                    $68,495                    3,365                     $20.42
         1996 Sep                    $73,004                    3,262                     $22.38
         1996 Oct                    $83,143                    3,541                     $23.48
         1996 Nov                    $70,969                    3,204                     $22.15
         1996 Dec                    $82,861                    3,517                     $23.56
                      Total         $446,185                   20,303                     $23.56
                                                                                        (Weighted)

 The average oil price to be used to determine oil exemptions for the fiscal period of May 1, 1997 through April 30, 1998 is
 $21.98 per barrel.

 Based on the current law, this price is more than $16.00 and less than 24.00 so the new exemption amounts to apply for this
 period are as follows:
                         Wells Greater Production
                         Than 2000 Feet Exempt if

                          Low Production Five (5) barrels or less
                          Water Flood Six (6) barrels or less
 The department is reviewing May 1997 exemption requests for necessary adjustments that nay be required die to the above
 change. Please direct any questions you may have to the Mineral Tax Section; 3rd Floor; Docking State Office Building;

Page 2

 Topeka, KS 66625-0001. Telephone Number: 913-296-7713

Date Composed: 10/06/1997 Date Modified: 10/10/2001

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