The Texas Railroad Commission has extended tax exemptions for two- and three-year inactive wells that are brought back into production. The rulemaking would amend Texas Statewide Rule 83, which reflects the state’s legislative extension, which originally expired more than a year ago.

Under the amended Texas Tax Code Statewide Rule 83 passed by the Texas Legislature earlier this year, a 10-year severance tax exemption for production from wells that have had no more than one month of production in a two-year period may be allowed. The legislature extended the deadline through Feb. 28, 2010.

“This exemption will continue the incentive program that already has benefited the public through increased oil and gas production,” said Railroad Commissioner Charles Matthews. “This production may not have been economically feasible without the tax incentive program. This incentive has contributed to a greater supply of energy, more jobs in the oil and gas industry and the efficient allocation of existing natural resources.”

Since the initial exemption period between September 1997 and May 2001, Matthews said more than 5,000 wells had been brought back into production, adding he believes the extension “will encourage producers to increase that number.”

For more information on the tax extension, visit the TRC web site at www.rrc.state.tx.us or call Dorsey Twidwell at (512) 463-6742.

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