North Dakota Oil Producers Report And Oil Purchasers Report Instructions Sheet (Page 7 of 23) in pdf

• By multiplying fifteen percent (15%) times the gross value of the condensate, or

• By using reasonable actual costs incurred to recover the condensate from a gas stream after the custody transfer meter. The costs

of recovery under this method must be fully substantiated upon request and are subject to audit by the Commissioner.

15. PROCEDURE FOR REPORTING LOAD OIL:

Pursuant to N.D. Admin. Code § 81-09-02-07 injected oil includes, but is not limited to, what is commonly known as power oil, frac

oil, and load oil.

When oil is produced from and injected into the same well the oil is not reported as production until it is recovered after injection.

When produced from one well but transported for use at a second well, the transported oil must be reported as production from the first

well and tax is due at the time the oil is transported. The transported oil must be excluded in determining production from the second

well. The excluded amount must be applied to the first oil recovered after injection.

• The volume of transported oil must be reported, and tax paid, on the T-10 Oil Producer’s Report in the month that the oil is

transferred from the producing well. Report using the API or group number of the well originally producing the oil.

• The transferred oil must be reported at the market value (i.e., average price per barrel) of other oil sold from the producing

well in the month of transfer. The gross production and oil extraction taxes are calculated on this market value and are

remitted by the producer.

• In the month the transferred oil is recovered from the well to which it was transferred, the oil recovered is not to be reported

as production from the second well. The oil recovered is accounted for on a first-in-first-out basis.

• In the month the transferred oil is sold from the well of recovery, the net sales volume and value (i.e., total sales less trans-

ferred oil) should be reported on the T-10 Oil Producer’s Report and the T-12 Oil Purchaser’s Report.

• The operator must retain adequate documentation to substantiate the transported oil’s initial production, transfer to a second

well, recovery from the second well and ultimate sale. The operator is responsible for certifying to the purchaser the trans-

ported oil volume and value that may be netted from the sales volume and value. The purchaser must retain the operator’s

certification.

16. PROCEDURE FOR REPORTING VOLUME GAINS:

To file a report for volume gains, please contact the Commissioner for specific instructions at 701-328-2705.

17. 18 MONTH CERTIFICATION REQUIREMENT:

Effective January 1, 1996, in order to receive an oil extraction tax exemption or tax rate reduction from the first day of eligibility,

N.D.C.C. § 57-51.1-03.1 requires a certification of qualifying well status prepared by the Industrial Commission be submitted to the

Commissioner as follows:

• To receive a tax exemption on production from a stripper well property from the first day of eligibility, the Industrial

Commission’s certification must be submitted to the Commissioner within 18 months after the end of the stripper well

property’s qualification period.

• To receive a tax exemption and a rate reduction on production from a new well from the first day of eligibility, the Industrial

Commission’s certification must be submitted to the Commissioner within 18 months after a new well is completed.

• To receive a tax exemption and a rate reduction from a work-over well from the first day of eligibility, the Industrial

Commission’s certification must be submitted to the Commissioner within 18 months after the work-over project is com-

pleted.

• To receive a tax exemption and a rate reduction on production from a secondary or tertiary project from the first day of

eligibility, the Industrial Commission’s certification must be submitted to the Commissioner within the following time periods:

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North Dakota Oil Producers Report And Oil Purchasers Report Instructions Sheet Page 7