Title 15 . Revenue

Chapter 55 . (Repealed)

Section 10. Monthly production rate at the economic limit for oil or gas produced before 1/1/95

15 AAC 55.010. Monthly production rate at the economic limit for oil or gas produced before 1/1/95

(a) The presumed monthly production rate at the economic limit of 300 barrels per well day for oil production of a lease or property includes royalty and all other ownership interests in that production.

(b) When the monthly production rate at the economic limit is being determined for a lease or property by dividing the per-unit value of production into the average monthly direct operating costs, the monthly production rate at the economic limit equals the final quotient obtained by dividing, first, the per-unit value of production into the average monthly direct operating costs other than royalty, and then dividing the first quotient by the fraction of production corresponding to all nonroyalty interests in the lease or property. If some or all of a direct operating cost is borne by a royalty interest, then with respect to that cost the royalty interest will be regarded as a nonroyalty interest, for purposes of the preceding sentence.

(c) The tax on oil produced from a lease or property in commercial production after June 30, 1981, must be computed by using the rates specified in AS 43.55.011 (b) and the economic limit factor specified in AS 43.55.013 (b). "Commercial production," for purposes of this subsection, means the production of oil for purposes of sale, or other beneficial use not associated with the exploration and development of the field in which the lease or property lies, except when the sale or beneficial use is incidental to the testing of an unproved well or unproved completion interval.

(d) When the primary production from a well or wells on a lease or property is gas, the monthly production at the economic limit for that lease or property is presumed to be 3,000 Mcf per well times the number of well days for that lease or property during that month for which the tax is to be paid. The economic limit for gas production of a lease or property includes royalty and all other ownership interests in the production. The taxpayer may rebut this presumption at a formal hearing under AS 43.05.240 by providing clear and convincing evidence that the value determined under AS 43.55.013 (i) for the lease or property, when divided into the average monthly direct operating cost determined under AS 43.55.013 (h) for the lease or property, produces a different amount for the monthly production at the economic limit under AS 43.55.013 (g) for the lease or property.

(e) This section applies only to oil or gas produced before 1/1/95.

History: Eff. 7/1/77, Register 63; am 3/26/82, Register 81; am 1/1/95, Register 132

Authority: AS 43.05.080

AS 43.55.011

AS 43.55.013

AS 43.55.110