Form Rpd-41171 - Well Workover Project Application And Reporting Instructions (Page 2 of 2) in pdf

WELL WORKOVER PROJECT

APPLICATION AND REPORTING INSTRUCTIONS

(Section 7-29B-1 through 7-29B-6 NMSA 1978)

The Natural Gas and Crude Oil Production Incentive Act revision passed in the 44

Legislature amended the laws

of 1995 by changing the tax rate and the related production by which the tax rate is applied to. The reduced

severance tax rate is two and forty-five hundredths percent (2.45%) of the taxable value determined under Section

7-29-4.1 NMSA 1978, provided that the annual average price of west Texas intermediate crude oil, determined

by the department by averaging the posted prices in effect on the last day of each month of the twelve-month

period ending on May 31 prior to the fiscal year in which the tax is to be imposed, was less than twenty-four dollars

($24.00) per barrel. In order to qualify for the reduced rate, the well workover project must be first approved by

the Oil Conservation Division (OCD) of the Energy, Minerals and Natural Resources Department. The well

workover tax incentive, with this revision, applies to all of the natural gas or crude oil produced from the approved

well workover project, beginning the first day of the month following the date that OCD certifies that the well

workover project has been completed. The well workover project must be in compliance with rules and regulations

as adopted by OCD concerning the Natural Gas and Crude Oil Production Incentive Act. The revision to this

Incentive Act was effective with May 1999 tax reporting, due on or before July 25,1999.

1. Who may use the well workover incentive tax rate: The tax filer who is responsible for paying the

production taxes on oil, on other liquid hydrocarbons removed at or near the wellhead, or on natural gas produced

from a well which has been approved and designated as a well workover project by OCD.

2. Who must file the application: Any tax filer who is using the reduced severance tax rate. If the special

tax rate code for a well workover project is used without receiving prior approval, the tax filer may be assessed

the additional severance tax at the regular rate.

3. How and where to file the application: Complete this form and send it, along with a copy of OCD’s

Certification of Approval and the production projection for the well workover project, to the Taxation and Revenue

Department, P. O. Box 2308, Santa Fe, NM 87504-2308. A separate application must be filed for each qualifying

well.

4. When to apply for the well workover incentive tax rate: When OCD certifies that the well workover

project has been completed and has certified the production projection for that project. After validating the

production unit number and well completion(s) on your application, the Department will mail a certification of

approval to use the well workover incentive tax rate and will provide the special tax rate code to be used when

reporting. Please do not use the reduced rate before you receive approval.

5. How to report the reduced tax rate: The revised well workover incentive tax rate applies to all of the natural

gas or crude oil produced from the approved well workover project, effective with May 1999 tax report. You must

report a separate tax detail line associated to

the volumes and related taxable value of the well

workover project. See Example.

Mail or deliver the completed form to:

New Mexico Taxation and Revenue Department

6. Claim for refund: If the reduced severance

Oil and Gas Bureau

tax rate was not applied when reporting produc-

1200 South St. Francis Drive

tion taxes for an eligible well after the effective

P. O. Box 2308

date, the taxpayer may file a claim for refund by

Santa Fe, NM 87504-2308

submitting amended returns using the instruc-

Telephone: (505) 827-0805

tions stated above and in accordance with

- 46 -

Section 7-1-26 NMSA 1978.

Form Rpd-41171 - Well Workover Project Application And Reporting Instructions Page 2

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