Section 15-36-304 - Production tax rates imposed on oil and natural gas - exemption(1) The production of oil and natural gas is taxed as provided in this section. The tax is distributed as provided in 15-36-331 and 15-36-332.(2) Natural gas is taxed on the gross taxable value of production based on the type of well and type of production according to the following schedule for working interest and nonworking interest owners: Working Interest | Nonworking Interest |
(a) (i) first 12 months of qualifying production | 0.5% | 14.8% |
(ii) after 12 months: |
(A) pre-1999 wells | 14.8% | 14.8% |
(B) post-1999 wells | 9% | 14.8% |
(b) stripper natural gas pre-1999 wells | 11% | 14.8% |
(c) horizontally completed well production: |
(i) first 18 months of qualifying production | 0.5% | 14.8% |
(ii) after 18 months | 9% | 14.8% |
(3) The reduced tax rates under subsection (2)(a)(i) on production for the first 12 months of natural gas production from a well begin following the last day of the calendar month immediately preceding the month in which natural gas is placed in a natural gas distribution system, provided that notification has been given to the department.(4) The reduced tax rates under subsection (2)(c)(i) on production from a horizontally completed well for the first 18 months of production begin following the last day of the calendar month immediately preceding the month in which natural gas is placed in a natural gas distribution system, provided that notification has been given to the department.(5) Oil is taxed on the gross taxable value of production based on the type of well and type of production according to the following schedule for working interest and nonworking interest owners: Working Interest | Nonworking Interest |
(a) primary recovery production: |
(i) first 12 months of qualifying production | 0.5% | 14.8% |
(ii) after 12 months: |
(A) pre-1999 wells | 12.5% | 14.8% |
(B) post-1999 wells | 9% | 14.8% |
(b) (i) pre-1999 stripper wells | 9% | 14.8% |
(ii) (A) pre-1999 stripper well exemption production | 0.5% | 14.8% |
(B) pre-1999 stripper well bonus production | 5% | 14.8% |
(c) (i) post-1999 stripper wells: |
(A) 3 through 10 barrels a day production | 5% | 14.8% |
(B) more than 10 barrels a day production | 9% | 14.8% |
(ii) (A) post-1999 stripper well exemption production | 0.5% | 14.8% |
(B) post-1999 stripper well bonus production | 5% | 14.8% |
(d) horizontally completed well production: |
(i) first 18 months of qualifying production | 0.5% | 14.8% |
(ii) after 18 months: |
(A) pre-1999 wells | 12.5% | 14.8% |
(B) post-1999 wells | 9% | 14.8% |
(e) incremental production: |
(i) new or expanded secondary recovery production | 8.5% | 14.8% |
(ii) new or expanded tertiary production | 5.8% | 14.8% |
(f) horizontally recompleted well: |
(i) first 18 months | 0.5% | 14.8% |
(ii) after 18 months: |
(A) pre-1999 wells | 12.5% | 14.8% |
(B) post-1999 wells | 9% | 14.8% |
(6)(a) The reduced tax rates under subsection (5)(a)(i) for the first 12 months of oil production from a well begin following the last day of the calendar month immediately preceding the month in which oil is pumped or flows, provided that notification has been given to the department.(b)(i) The reduced tax rates under subsection (5)(d)(i) on oil production from a horizontally completed well for the first 18 months of production begin following the last day of the calendar month immediately preceding the month in which oil is pumped or flows if the well has been certified as a horizontally completed well to the department by the board.(ii) The reduced tax rates under subsection (5)(f)(i) on oil production from a horizontally recompleted well for the first 18 months of production begin following the last day of the calendar month immediately preceding the month in which oil is pumped or flows if the well has been certified as a horizontally recompleted well to the department by the board.(c) New or expanded secondary recovery production is taxed as provided in subsection (5)(e)(i) only if the average price reported and received by the producer for Montana oil marketed during a calendar quarter is less than $54. If the price of oil is equal to or greater than $54 a barrel, then new or expanded secondary recovery production from pre-1999 wells and from post-1999 wells is taxed at the rate imposed on primary recovery production under subsections (5)(a)(ii)(A) and (5)(a)(ii)(B), respectively, for production occurring in that quarter, other than exempt stripper well production.(d) Pre-1999 stripper well exemption production is taxed as provided in subsection (5)(b)(ii)(A) only if the average price reported and received by the producer for Montana oil marketed during a calendar quarter is less than $54 a barrel. If the price of oil is equal to or greater than $54 a barrel, there is no pre-1999 stripper well exemption tax rate and oil produced from a well that produces 3 barrels a day or less is taxed as pre-1999 stripper well bonus production.(e)(i) Post-1999 stripper well exemption production is taxed as provided in subsection (5)(c)(ii)(A) only if the average price reported and received by the producer for Montana oil marketed during a calendar quarter is less than $54 a barrel. If the price of oil is equal to or greater than $54 a barrel, there is no post-1999 stripper well exemption tax rate and oil produced from a well that produces 3 barrels a day or less is taxed as stripper well bonus production.(ii) Stripper well bonus production is subject to taxation as provided in subsection (5)(c)(ii)(B) only if the average price reported and received by the producer for Montana oil marketed during a calendar quarter is equal to or greater than $54 a barrel.(f) The tax rates under subsection (5)(f) apply only to the incremental production of a horizontally recompleted well.(7) The tax rates imposed under subsections (2) and (5) on working interest owners and nonworking interest owners must be adjusted to include the privilege and license tax adopted by the board of oil and gas conservation pursuant to 82-11-131 and the tax for the oil and gas natural resource distribution account. The total of the privilege and license tax and the tax for the oil and gas natural resource distribution account established in 90-6-1001(1) is 0.3%.(8) Any interest in production owned by the state or a local government is exempt from taxation under this section.Amended by Laws 2023, Ch. 725,Sec. 2, eff. 1/1/2024.Amended by Laws 2023, Ch. 569,Sec. 2, eff. 1/1/2024.Amended by Laws 2021, Ch. 559,Sec. 6, eff. 1/1/2022, and applicable to the calendar year beginning after December 31, 2021.Amended by Laws 2019, Ch. 414,Sec. 1, eff. 7/1/2019, applicable to oil and gas production occurring on or after July 1, 2019.Amended by Laws 2019, Ch. 71,Sec. 1, eff. 7/1/2019.Amended by Laws 2017, Ch. 91,Sec. 1, eff. 3/23/2017.Amended by Laws 2015, Ch. 301, Sec. 1, eff. 7/1/2015.Amended by Laws 2015, Ch. 29, Sec. 2, eff. 10/1/2015.En. Sec. 4, Ch. 451, L. 1995. amd. Sec. 3, Ch. 571, L. 1995; amd. Sec. 2, Ch. 573, L. 1995; amd. Sec. 4, Ch. 581, L. 1995; amd. Sec. 8, Ch. 466, L. 1997; amd. Sec. 2, Ch. 488, L. 1999; amd. Sec. 2, Ch. 530, L. 1999; amd. Secs. 3, 4, 17(3), Ch. 554, L. 1999; amd. Sec. 2, Ch. 421, L. 2001; amd. Sec. 5, Ch. 522, L. 2003; amd. Sec. 2, Ch. 592, L. 2005; amd. Sec. 3, Ch. 603, L. 2005; amd. Sec. 1, Ch. 286, L. 2007; amd. Sec. 2, Ch. 33, L. 2009; amd. Sec. 8, Ch. 19, L. 2011.