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Producer Relief Pending In Texas Legislature

Producer Relief Pending In Texas Legislature

Companion bills have been introduced in the Texas legislature to give small producers a break on gas and oil severance taxes in light of foundering commodity prices. If enacted, legislation would trigger a temporary suspension of severance taxes on production from certain wells.

Relief would be triggered if the three-month average price for gas hits $1.89/Mcf (NYMEX) or $15/barrel (NYMEX) for oil.. When the price trigger is reached, the severance tax would be suspended until the three-month average rises above the trigger price. Severance tax relief would apply to oil production from leases with wells averaging 15 barrels/d or less and to gas production from leases with wells averaging 90 Mcf/d or less. If passed, the measure would take effect immediately and last until Aug. 31 or until $45 million in tax relief has been granted, whichever comes first.

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