Sergio Chapa | Biz Journals
The owners of low-producing oil wells, known as “stripper wells” or “marginal wells” are now officially eligible for a tax break.
Record low crude oil prices have prompted the Comptroller’s Office of Texas to roll out severance tax exemptions for low-producing oil wells for the first time ever.
Under Texas state law, there is a 4.6 percent severance tax on the market value of oil produced at each well, but back in 2005, lawmakers created exemptions for wells producing less than 15 barrels per day when prices fall below certain levels for three months or longer.
It’s still not clear how many wells this tax exemption would affect, but figures from the Texas Alliance of Energy Producers show that there were 171,000 marginal oil wells in Texas back in 2014.