Changes Coming to Taxation of O&G Reserves in Ohio

Does anyone who knows about these taxes have any positive or negative comments about this change?  I don't like the idea of the Producers collecting it from us.  More numbers to watch. Also will the Producers bother to challenge any overvalue ( they have deep pockets) or will they just pass it on to us?

Changes Coming to Taxation of Oil and Gas Reserves in Ohio

 AUGUST 23, 2016POSTED IN ENERGY

The Ohio Tax Commissioner recently issued a memorandum to county auditors regarding significant changes to the taxation of oil and gas reserves starting in tax year 2016.  These significant changes include:

  • Elimination of filing forms 6 and 6A.
  • Values will now be based upon production volumes reported to the Ohio Department of Natural Resources (ODNR).  After hearing from industry representatives, the Ohio Tax Commissioner acknowledged that this approach may lead to higher values than statutorily permitted in some circumstances.  Accordingly, the Ohio Tax Commissioner announced a temporary fix to address this circumstance.
  • The new approach will overvalue oil and gas reserves in some circumstances because amounts reported to ODNR are produced amounts, whereas O.R.C. 5713.051 requires that values be based on volumes “produced and sold.”  The temporary fix is re-instatement of DTE form 6A for the limited purpose of ensuring that producers will be permitted to challenge any overassessment based on the difference between “produced” and “produced and sold.”  If producers wish, they can file a DTE form 6A with each county auditor where there is a difference between “produced” and “produced and sold.”
  • Tax bills will be issued only to producers; royalty interest holders will no longer receive tax bills.  As a result, producers will be responsible for collecting taxes owed by royalty interest holders.
  • The memorandum confirms that minerals bartered as a form of payment are considered sold and should be reported as taxable production.

Going forward, the changes discussed above will significantly change how the ad valorem tax is collected.  As such, it will be very important to accurately report production volume to ODNR, accurately track shrinkage, and confirm that ODNR is accurately attributing volume to each active production site.


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Permalink Reply by Dan on August 24, 2016 at 7:45am
It sounds like any leaks, blow offs etc could be taxed. The State won't be concerned with any over payments.
Permalink Reply by PA Joe on August 24, 2016 at 8:19am

Producers HATE this. Its is an accounting nightmare and huge public relations minefield for the reasons you expressed in your concerns above. Surely, some will be butt holes about it and some who want to do the right thing will always be under a cloud of suspicion. This is the State trying to shirk its responsibilities to the citizens of Ohio so they can keep their budgets down and not have to hire people to manage the process. If I lived in Ohio my State reps phone would be ringing non-stop. 

0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on August 24, 2016 at 9:32am

Quote from above:

"Going forward, the changes discussed above will significantly change how the ad valorem tax is collected.  As such, it will be very important to accurately report production volume to ODNR, accurately track shrinkage, and confirm that ODNR is accurately attributing volume to each active production site".

Don't forget that ALOV & SURE leases will require Chesapeake to pay the tax they calculate. I'm betting they will read our leases to determine who to overtax.

Still no Severance Tax on NGLs and no NGL volume reporting. Columbus must be happy with the Status Quo.

With Bible johnny owning the tax commissioner, I'm sure the two will figure out a way to continue ignoring Ohio's theft. I notified the tax commissioners office of the theft with evidence in 2015. No action was taken since johnny was Washington Dreaming. Where does his money come from anyway. Could it be Ohio's Bright Future that has been handed over for campaign support. You Know It Is.

It will be very important to continue using  the Honor System so no one in the State will see how much Oil is actually being taken.

NGLs have never been taxed, Volumes taken have never been recorded (The ODNR says NGLs are included in Natural Gas volumes, that's not what my royalty statement shows), or a dollar in royalties paid for NGLs taken by Chesapeake.

Did you know Chesapeake Energy is in Ohio for the NGLs? Read about it in their Quarterly Reports from the past.

This is Huge for Chesapeake, and gives nothing to Ohio Citizens for the valuable NGLs being taken.

So why do you think Chesapeake is selling the other Shale Plays and hanging out in Ohio?

Free means less production costs for taking Propane, Butane, Pentane (Natural Gasoline at your local pumps today), Methane, and Ethane. Chesapeake can show they bought our NGLs for 0 to 18 cents a gallon, use the Access Midstream Kensington and Scio Plants that we paid for, to over charge us for separating out each of the above products from NGLs (sound similar to PAs pipeline overcharges?), then reduce our oil and gas royalties by the overcharge after underpaying us for the oil and gas to start with. No wonder we owe Chesapeake, they are cooking the books. See the Chesapeake Revenue Department Buck Well 1H Royalty Calculation Spreadsheet for the evidence.

Give them the tax books and they will do the same to the State of Ohio, we will owe them for tax overpayment, the same way we owe them for the bogus royalty overpayment . This is already happening in Brooke County WV.

One day everyone will realize "You Can't Trust Domestic O&G Producers" or you will lose every time.

Ohio is well overdue in using a Grand Jury to investigate our Elected Officials. This is no longer a "Civil Matter", it's a RICO Criminal Matter in magnitude never before seen in Ohio.

For starters, maybe publishing the facts in the News would be a good start.

0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on August 24, 2016 at 10:03am

See Kevin T Roberts CAUV lawsuit against the Bible johnny and the tax commissioner for changing how the CAUV taxes were calculated outside of the laws that control CAUV Taxes.

Bible johnny shifted Ohio taxes from Income Tax payers to Real Estate Tax payers, so johnny can claim he lowered income taxes for Ohioans. 

Directing the tax commissioner in this way shows OWNERSHIP of the tax commissioner by the governor.

Telling a lie, takes the Bible out of johnny's hands since he apparently does what he wants to do. He'll be hanging out trying to look like the better candidate to vote for this fall. Don't be fooled. Ohioans are paying a heavy cost for electing him, if we did in fact elect him at he polls.

0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on August 24, 2016 at 9:22pm

Let's take another look at Produced vs Produced and Sold:

Remember, Chesapeake presented Arguments to the Ohio Supreme Court on Jan 5, 2016 Clearly stating they are selling the Well Products at the Well Head. They sell to CEMI, it's in black and white on the Chesapeake Energy Revenue Department Royalty Calculation Spreadsheet for Buck Well 1H. Produced = Sold. The values will be bogus and well below market value so you might not want to count that sale.

Request all Ohio Wells Chesapeake Revenue Department Royalty Calculation spreadsheets, and they will show the well products were sold at the well head, plus a lot of other interesting data you won't want to know about.

You have to watch Chesapeake, they claim they sold at the Well Head when it benefits them, or can show they sold to an End Point buyer for a fair market value if that benefits them. They make their own rules. Apparently those who took money from them have their names in a Very Large Black Book and are no longer FREE to act on behalf of Ohio Citizens. 

Tax them the way Ohio will make the most money, Ohioan's are being "Short Changed" To The Tune of BILLIONS.

We elected you folks. Surprise, you don't own Our State and you're not Ohio's Wealthy ceo's.

Each of you can and will be imprisoned and fined for your inaction.  

0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on August 24, 2016 at 9:28pm

Attached is the Spreadsheet from Chesapeake Energy. CEMI was Chesapeake Energy Marketing Inc, but the name was changed, again, last year. So be careful when you ask about CEMI there may be some double talk used to hide the truth.

Ask about the Chesapeake's "Royalty Owners" company. Why would Chesapeake have a company named after the people they are short changing? The FBI is aware of this company, and if they looked, they know exactly what Chesapeake is up to.

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