Are oil and gas regulatory fees considered a tax or a deduction? Who has the liability to pay? First purchaser? Producer? Leasor?
Texas assesses severance tax and oil field clean-up fee on oil and gas production. I assume by regulatory fee, you mean the oil field clean up fee. Gas is assessed at $0.000667 per mcf of gas. On 1,500 mcf, the charge is $1.00. Oil is assessed at $0.00625 (5/8 of one cent) per bbl of oil. On 160 bbl, the charge is $1.00. Both severance tax and the oil field clean up regulatory fee are paid by either the operator or by the purchaser, depending on which is reporting the sales to the Texas Comptroller. As a royalty owner, you will have this combined tax and regulatory fee charged against your royalties. In Reeves County, many oil wells are being classified as gas wells under RRC field rules and then qualify as “high-cost gas wells” which pay little or no severance tax. There is no exemption from the oil field clean up regulatory fees.
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