Fillable Form 10-163 - Texas Report Of Natural Gas Tax

Form 10-163 (Back)(Rev.3-11/4)

Texas Report of Natural Gas Tax Producer Lease Detail Supplement

For assistance call (800) 252-1384 or (512) 463-4600. Information is also available online at

Specific Instructions

VOLUMES: Report all gas volumes in "MCF" (1000 cubic feet at a pressure base of 14.4 pounds plus 4 ounces or 14.65 pounds absolute). For

information on converting MCF to MMBTU or converting MMBTU to MCF, see the Natural Gas Tax Guide on the Comptroller's website. Do not report

any volume amounts with decimals. Round the volume amount to the next whole number.

Items 1, 2, 5, 7 and 8.

Enter the lease identification number assigned by the Texas Railroad Commission (RRC) in Item 7. For a gas lease, enter the 6-digit lease

number. For an oil lease, add a leading zero (0) to the 5-digit lease number and enter as a 6-digit number. If the RRC has not assigned a

lease number, then enter the 6-digit drilling permit number in Item 7.

Items 7 and 8: Do not leave blank.

If reporting a plant, then enter R3 and the last four digits of the plant identification number assigned by the RRC in Item 7.

Item 3.

COMMODITY: Enter the 2-digit alpha code for the type of commodity reported on the lease identified in Item 7.

Raw Gas (RG) - Sale or purchase of raw gas, unprocessed gas from an oil well or gas well gas.

Lease Use (LU) - All gas produced and used to run equipment on the lease regardless of whether it is for oil well, gas well gas or residue

gas. The lease use item will also include miscellaneous sales of gas to persons not normally engaged in purchasing gas for resale.

Condensate (CN) - The taxable disposition and production of all condensate from a gas well, actual or theoretical. Condensate is the liquid

hydrocarbon (a high gravity oil) that is or can be, removed from gas by a separator. It does not include absorption and separation by a

fractionating process. Condensate volume should be rounded to the nearest barrel.

Residue (RS) - Residue gas sold or purchased only when there is a distinct sale or purchase of residue gas. Example: If a processing

plant takes title to both the products and residue commodities, do not report the products and residue commodities as separate items. Use

the raw gas designation and enter the plant operator as the purchaser.

Products (PR) - Report only when the purchasers of products and residue commodities are different parties. The volume associated with

the product commodity will be the raw gas volume delivered to the gas processing plant (plant inlet volume).

Item 4.

COMMODITY CODE: Enter the numeric code for the type of commodity reported on the lease identified in Item 1 and Item 7. The numeric

codes are: 1 - Raw Gas, 4 - Condensate, 5 - Residue, 6 - Products.

Item 6.

COUNTY CODE: Enter the 3-digit county code for the county of production indicated in Item 2. A list of county codes is available on the

Comptroller's website at or in the Natural Gas Tax Guide.

Check Digit: If not known, the check digit is available at https://ecpa.cpa.state.tx.us/cong/checkDigitForward.do.

Item 9.

EXEMPTION TYPE: Enter the Comptroller approved numeric code for the legislative exemption type, if applicable.

03 -

Two-year inactive well, effective Sept. 1, 1997

09 -

Incremental production casinghead gas lease, effective

04 -

Flared/released casinghead gas well, effective Sept. 1, 1997

Sept. 1, 1997

05 -

High cost gas lease with reduced tax rate, effective

11 -

Qualifying low-producing gas well, effective Sept. 1, 2005

Sept. 1, 1996

12 -

Reactivated orphaned well, effective Jan. 1, 2006

07 -

Three-year inactive well, effective Sept. 1, 1991

15 -

Geothermal energy, effective Sept. 1, 2009

Item 10. API NUMBER: Enter the last 8 digits of the America Petroleum Institute (API) number assigned by the RRC to each well that qualifies for a

well-level exemption. The API number is only required for the two-year inactive well exemption (Type 3), three-year inactive well exemption

(Type 7) and reactivated orphaned well exemption (Type 12).

Item 11. OFF LEASE SALE? Gas is considered on "off lease" sale when delivery of the gas to the purchaser is made away from the lease. If the

producer arranges for delivery of gas, then the purchaser records the volume received at the point of delivery. If an "off lease" sale is

reported in Item 11 as "YES," then the tax liability must be reported as "YES" in Item 18, the purchaser taxpayer number must be left blank

in Item 13, and the next taxable value must be reported in Item 22 and Item 25, if applicable.

Item 14. TOTAL LEASE VOLUME: Enter 100% of the volume produced for the lease reported in Item 7 for each commodity type. This volume

should match the volume reported to the RRC. If you are a non-operator for this lease, report zero volume in Item 14.

Item 15. TAX REIMBURSEMENT: Mark the block indicating whether tax reimbursement is included in calculating the value in Item 15, as outlined in

your contract. For information on tax reimbursement, see Tax Rule 3.18, at

Item 16. YOUR VOLUME: Producer/Operator - Enter the total volume of gas or condensate sold, as noted on your contract. Do not use decimals.

Item 17. VALUE OF YOUR VOLUME: Enter the entire value associated with the volume indicated in Item 14. This is usually referred to as the

"contract price." Do not include tax reimbursement, if applicable. Round all volumes up to the nearest whole number.

Item 18. ARE YOU LIABLE FOR TAX? Enter "YES" or "NO" for all lease types, even if you do not owe tax. Do not leave blank. Tax liability must be

reported as "YES" by at least one party as stated in the contract between the operator and the purchaser, even if the lease qualifies for

100% exemption and taxes are not due because of the legislative exemption status.

Item 19. GOVERNMENTAL ROYALTY VOLUME: Enter the volume of gas not subject to tax due to governmental exempt status, such as a city,

town or county government in Texas, a school district in Texas, public (state owned) colleges and universities in Texas or political

subdivisions of the Federal government. See Rule 3.14.

Item 20. GOVERNMENTAL ROYALTY VALUE: Enter the value of the volume for the gas reported in Item 17. Do not enter volumes associated with

lease types approved for a legislative tax exemption.

Item 21. MARKETING COST: Enter actual marketing cost incurred. The "market value at the mouth of the well" shall be determined by ascertaining

the actual marketing costs incurred by the producer and subtracting these costs from the producer's gross cash receipts from the sale of

the gas. For detailed information on allowable marketing costs, visit

Item 22. NET TAXABLE VALUE: Enter the calculation of Item 17, less Items 20 and 21. If Items 20 and 21 exceed Item 17, enter the net taxable

value as zero in Item 22. If reporting the following exemption types, then enter net taxable values indicated below:

Exempt Type

Enter the net taxable value as:

03, 04, 07, 12 or 15

zero

the sum of Item 17, less Items 20 and 21 and proceed to Items 23 and 24

50% of the sum of Item 17, less Items 20 and 21

75% of the sum of Item 17, less Items 20 and 21 if the Comptroller certified price of gas ranges from $3.01 to $3.50/MCF

for 25% exemption

50% of the sum of Item 17, less Items 20 and 21 if the Comptroller certified price of gas ranges from $2.51 to $3.00/MCF

for 50% exemption

zero if the Comptroller certified price of gas is less than or equal to $2.50/MCF

for 100% exemption

Item 23. REDUCED TAX RATE FOR TYPE 05: Enter the 3-digit reduced tax rate for the approved exemption Type 5 lease indicated in Item 7.

Item 24. TAX DUE ON TYPE 05: Enter the tax due amount for the approved exemption Type 5 lease reported by multiplying Item 22 times the tax

rate indicated in Item 23.

under Chapters 552 and 559, Government Code, to review, request and correct information we have on file about you.

You have certain rights

Form 10-163 - Texas Report Of Natural Gas Tax - 2011 Page 2

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