Latest Ohio Legislature Bill on Severance Tax 12/2013

Here is link to the latest bill on severance tax  for Ohio.

http://www.legislature.state.oh.us/bills.cfm?ID=130_HB_375

Here is comment by the Ohio Oil and Gas Association on this bill; they seem to like it.

How will it affect royalty owners?

http://www.ohio.com/blogs/drilling/ohio-utica-shale-1.291290/ohio-o...

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Permalink Reply by Eric on December 6, 2013 at 1:51am

it appears that class warfare is not exclusively contained in the democratic party.

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on December 6, 2013 at 8:48am

No, it's not class warfare, it's what Happy Dad said, wealth redistribution.  However, if the severance tax isn't used for a tax cut I think I'd be in favor of it.  I think our governor dropped that pretty quickly when he was called out on it as merely a redistribution tactic to gain electoral favor.

Permalink Reply by Dan on December 6, 2013 at 9:51am
I can never decide who is more harmfull, tax, spend and waste wealth-redistributing democrates. Or tax, spend and waste wealth-redistributing republicans. While many folks here in Ohio were all worried about some of the Dems running the state budget array, Kasich snuck in the back of the room and stuck his hand in the pie.
0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on December 6, 2013 at 5:52pm

Yeah, Johnny boy still gets my vote because his opponent is mostly inept, but he sure as heck isn't getting any more checks from me or my family.

Permalink Reply by searcherone on December 5, 2013 at 2:18pm

This is the first article I have found on the new proposal with Rep. Huffman saying a hearing on the bill before the holidays and a big push after the holidays for its passage.

http://www.wksu.org/news/story/3760

and a second story

http://www.cleveland.com/open/index.ssf/2013/12/house_republicans_p...

Permalink Reply by searcherone on December 6, 2013 at 11:12am

Here is a summary of this proposed bill.  How about some comments on individual parts of the bill.

http://www.bricker.com/publications-and-resources/publications-and-...

Permalink Reply by Billy Park Whyde on December 6, 2013 at 11:42am

" In addition, the owner of oil or natural gas in the ground may designate another taxpayer who has a working interest or royalty interest in the minerals, and who is liable for the horizontal well severance tax (e.g., a landowner under an oil and gas lease) to claim the credit. The credit may be claimed by one party or the other, but not by both."

By both? Anyone think CHK would relinquish the severance tax for the land owners benefit?

Permalink Reply by Joseph-Ohio on December 6, 2013 at 12:12pm
Why would a landowner be granted or assigned the tax credit by the lessee ?
The only reason that I can think of would be that the landowner paid the Severence Tax.
If the lessee paid the tax why would he allow the landowner the credit ?
Answer is that the lessee would not.
I think landowners should be careful to not become liable for the Severence Tax unless they want an ownership stake in a well and the liability that goes along with it.
To not be liable for Severence Tax means to me to not be a well owner.
If a landowner does not want to be a well owner the landowner should not be forced into it.
It should be disallowed for a landowner to become force pooled into an ownership stake in any well that the landowner doesn't desire an ownership stake in.
One question I have is do these new rules accommodate that choice ?
Or is it possible for a landowner to be forced into an ownership stake and Severence Tax liability (by being force pooled into a lease that takes that choice away) ?
Permalink Reply by Joseph-Ohio on December 6, 2013 at 12:33pm
It can get pretty complicated I'm thinking.
If for instance an E & P and a landowner (or numerous landowners) own part of a well (prorated on the basis of acreage) and only one gets to claim a tax credit - I'm guessing the E & P will claim the credit and the landowners just get to pay their share of the tax.
How is that fair ?
Permalink Reply by Joseph-Ohio on December 9, 2013 at 1:24am
As we understand the big leasing picture if an O & G / E & P offers a landowner a deficient lease agreement (perhaps a lease that places the burden of production / post production / Severance Tax / other burdens on the landowner) and the landowner refuses it; the landowner may then end up being force pooled into an even more deficient lease agreement (instead of negotiating better circumstances).
The more deficient force pooled arrangement may place the landowner in an unwanted ownership stake in the well - which should not be allowed to occur.

That's what I mean by losing leverage / the power to negotiate better terms.

Things are too one sided / the deck is stacked in favor of the prospective O & G / E & P prospective lessee.

All only in my most humble opinion as a landowner / prospective lessor.
Permalink Reply by Billy Park Whyde on December 9, 2013 at 6:11pm

My bet is the one that sponsored the bill knows little about the effects of forced pooling to begin with or cares nothing about it.

Permalink Reply by Billy Park Whyde on December 6, 2013 at 1:36pm

Another question is this severance tax upon the total gross production? If so then would the O&G get struck with 100% of the severance paying the tax upon say the 18-20% royalty? 

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