US Lower 48 Upstream Fiscal and Regulatory Report – Uncertain Outlook for State Severance Tax Measures and Federal Tax Reform

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Published: October 31, 2017 Report Code: GDGE0126UFR-ST

Report Overview
Table of Contents
Table
Figures

“US Lower 48 Upstream Fiscal and Regulatory Report – Uncertain Outlook for State Severance Tax Measures and Federal Tax Reform”, presents the essential information relating to the terms which govern investment into the United States’s upstream oil and gas sector. The report sets out in detail the contractual framework under which firms must operate in the industry, clearly defining factors affecting profitability and quantifying the state’s take from hydrocarbon production. Considering political, economic and industry specific variables, the report also analyses future trends for the United States’s upstream oil and gas investment climate.

Scope

Overview of current fiscal terms governing upstream oil and gas operations in the United States

Assessment of the current fiscal regime’s state take and attractiveness to investors

Charts illustrating the regime structure, and legal and institutional frameworks

Detail on legal framework and governing bodies administering the industry

Levels of upfront payments and taxation applicable to oil and gas production

Information on application of fiscal and regulatory terms to specific licenses

Outlook on future of fiscal and regulatory terms in United States

Reasons to Buy

Understand the complex regulations and contractual requirements applicable to the United States’s upstream oil and gas sector

Evaluate factors determining profit levels in the industry

Identify potential regulatory issues facing investors in the country’s upstream sector

Utilize considered insight on future trends to inform decision-making

1. Table of Contents

1. Table of Contents 1

1.1. List of Tables 6

1.2. List of Figures 7

2. Regime Overview 8

3. State Take Assessment 10

4. Key Fiscal Terms 12

4.1. Royalties, Bonuses, and Fees 12

4.1.1. Cash Bonus 12

4.1.2. Rentals 12

4.1.3. Royalties 14

4.2. Production Tax 16

4.2.1. Alabama 16

4.2.2. Arizona 17

4.2.3. Arkansas 17

4.2.4. California 18

4.2.5. Colorado 18

4.2.6. Connecticut 19

4.2.7. Delaware 19

4.2.8. Florida 19

4.2.9. Georgia 19

4.2.10. Idaho 19

4.2.11. Illinois 20

4.2.12. Indiana 20

4.2.13. Iowa 20

4.2.14. Kansas 20

4.2.15. Kentucky 21

4.2.16. Louisiana 22

4.2.17. Maine 23

4.2.18. Maryland 23

4.2.19. Massachusetts 23

4.2.20. Michigan 23

4.2.21. Minnesota 24

4.2.22. Mississippi 24

4.2.23. Missouri 25

4.2.24. Montana 26

4.2.25. Nebraska 27

4.2.26. Nevada 27

4.2.27. New Hampshire 27

4.2.28. New Jersey 27

4.2.29. New Mexico 27

4.2.30. New York 29

4.2.31. North Carolina 29

4.2.32. North Dakota 29

4.2.33. Ohio 30

4.2.34. Oklahoma 30

4.2.35. Oregon 31

4.2.36. Pennsylvania 31

4.2.37. Rhode Island 32

4.2.38. South Carolina 32

4.2.39. South Dakota 32

4.2.40. Tennessee 33

4.2.41. Texas 33

4.2.42. Utah 34

4.2.43. Vermont 35

4.2.44. Virginia 35

4.2.45. Washington 35

4.2.46. Wisconsin 35

4.2.47. West Virginia 36

4.2.48. Wyoming 36

4.3. Property Tax 37

4.3.1. Alabama 37

4.3.2. Arizona 37

4.3.3. Arkansas 37

4.3.4. California 37

4.3.5. Colorado 37

4.3.6. Connecticut 38

4.3.7. Delaware 38

4.3.8. Florida 38

4.3.9. Georgia 38

4.3.10. Idaho 38

4.3.11. Illinois 38

4.3.12. Indiana 38

4.3.13. Iowa 39

4.3.14. Kansas 39

4.3.15. Kentucky 39

4.3.16. Louisiana 39

4.3.17. Maine 39

4.3.18. Maryland 39

4.3.19. Massachusetts 40

4.3.20. Michigan 40

4.3.21. Minnesota 40

4.3.22. Mississippi 40

4.3.23. Missouri 40

4.3.24. Montana 40

4.3.25. Nebraska 40

4.3.26. Nevada 41

4.3.27. New Hampshire 41

4.3.28. New Jersey 41

4.3.29. New Mexico 41

4.3.30. New York 41

4.3.31. North Carolina 41

4.3.32. North Dakota 41

4.3.33. Ohio 42

4.3.34. Oklahoma 42

4.3.35. Oregon 42

4.3.36. Pennsylvania 42

4.3.37. Rhode Island 42

4.3.38. South Carolina 42

4.3.39. South Dakota 42

4.3.40. Tennessee 43

4.3.41. Texas 43

4.3.42. Utah 43

4.3.43. Vermont 43

4.3.44. Virginia 43

4.3.45. Washington 43

4.3.46. West Virginia 43

4.3.47. Wisconsin 43

4.3.48. Wyoming 44

4.4. State Corporate Income Tax 44

4.4.1. Alabama 44

4.4.2. Arizona 44

4.4.3. Arkansas 45

4.4.4. California 45

4.4.5. Colorado 45

4.4.6. Connecticut 45

4.4.7. Delaware 46

4.4.8. Florida 46

4.4.9. Georgia 46

4.4.10. Idaho 46

4.4.11. Illinois 46

4.4.12. Indiana 47

4.4.13. Iowa 47

4.4.14. Kansas 48

4.4.15. Kentucky 48

4.4.16. Louisiana 48

4.4.17. Maine 49

4.4.18. Maryland 49

4.4.19. Massachusetts 49

4.4.20. Michigan 49

4.4.21. Minnesota 49

4.4.22. Mississippi 50

4.4.23. Missouri 50

4.4.24. Montana 50

4.4.25. Nebraska 50

4.4.26. Nevada 50

4.4.27. New Hampshire 50

4.4.28. New Jersey 50

4.4.29. New Mexico 50

4.4.30. New York 51

4.4.31. North Carolina 51

4.4.32. North Dakota 51

4.4.33. Ohio 51

4.4.34. Oklahoma 51

4.4.35. Oregon 52

4.4.36. Pennsylvania 52

4.4.37. Rhode Island 52

4.4.38. South Carolina 52

4.4.39. South Dakota 52

4.4.40. Tennessee 52

4.4.41. Texas 52

4.4.42. Utah 53

4.4.43. Vermont 53

4.4.44. Virginia 53

4.4.45. Washington 53

4.4.46. West Virginia 53

4.4.47. Wisconsin 53

4.4.48. Wyoming 53

4.5. Federal Corporate Income Tax 54

4.5.1. Tax Rate 54

4.5.2. Deductions and Depreciation 54

4.5.3. Depletion Allowance 55

5. Regulation and Licensing 56

5.1. Legal Framework 56

5.1.1. Governing Law 57

5.1.2. Contract Type 58

5.1.3. Title to Hydrocarbons 58

5.2. Institutional Framework 59

5.2.1. Licensing Authority 60

5.2.2. Regulatory Agency 62

5.3. License Terms 64

5.3.1. Duration and Relinquishments 64

6. Outlook 66

7. Appendix 68

7.1. Contact Us 68

7.2. Disclaimer 68

Table

1.1. List of Tables

Table 1: Regime Overview 8

Table 2: US Lower 48, Typical Annual Rental Rates – State Lands (US$/acre) 12

Table 3: US Lower 48, Typical Royalty Rates – State Lands (%) 14

Table 4: US Lower 48 – South Dakota, Criteria for Increment Status for Royalty Reduction on State Land 15

Table 5: US Lower 48 – Alabama, Production Tax 16

Table 6: US Lower 48 – Alabama, Privilege Tax 16

Table 7: US Lower 48 – Arizona, Combined Transaction Privilege Tax and County Excise Tax Rates 17

Table 8: US Lower 48 – Colorado, Severance Tax 18

Table 9: US Lower 48 – Florida, Production Tax – Tertiary and Mature Oil 19

Table 10: US Lower 48 – Illinois, Hydraulic Fracturing Tax Rates – Oil 20

Table 11: US Lower 48 – Louisiana, Severance Tax Rates – Liquids 22

Table 12: US Lower 48 – Louisiana, Severance Tax Rates – Gas 22

Table 13: US Lower 48 – Michigan, Drilling Depth and Average Daily Production Thresholds for Marginal Property Classification 23

Table 14: US Lower 48 – Michigan, Oil and Gas Fee Rates (%) 24

Table 15: US Lower 48 – Mississippi, Severance Tax Rates – Liquids 24

Table 16: US Lower 48 – Mississippi, Severance Tax Rates – Natural Gas 25

Table 17: US Lower 48 – Montana, Severance Tax Rates – Liquids 26

Table 18: US Lower 48 – Montana, Severance Tax Rates – Gas 26

Table 19: US Lower 48 – New Mexico, Severance Tax Rates – Liquids 28

Table 20: US Lower 48 – New Mexico, Severance Tax Rates – Gas 28

Table 21: US Lower 48 – New Mexico, Emergency School Tax – Liquids 29

Table 22: US Lower 48 – New Mexico, Emergency School Tax – Gas 29

Table 23: US Lower 48 – North Dakota, Oil Extraction Tax Incentives 30

Table 24: US Lower 48 – Oklahoma, Severance Tax Exemptions 31

Table 25: US Lower 48 – Pennsylvania, Impact Fee Rates (US$) 32

Table 26: US Lower 48 – Texas, Natural Gas Tax Exemption Price Thresholds 33

Table 27: US Lower 48 – Utah, Severance Tax Rates (%) 34

Table 28: US Lower 48 – Utah, Severance Tax Exemptions 35

Table 29: US Lower 48 – Wyoming, Severance Tax Exemptions 36

Table 30: US Lower 48 – Arizona, Corporate Income Tax Rates (%) 44

Table 31: US Lower 48 – Arkansas, Corporate Income Tax Rates (%) 45

Table 32: US Lower 48 – Indiana, Corporate Income Tax Rates (%) 47

Table 33: US Lower 48 – Iowa, Corporate Income Tax Rates (%) 47

Table 34: US Lower 48 – Kentucky, Corporate Income Tax Rates (%) 48

Table 35: US Lower 48 – Louisiana, Corporate Income Tax Rates (%) 48

Table 36: US Lower 48 – Maine, Corporate Income Tax Rates (%) 49

Table 37: US Lower 48 – North Dakota, Corporate Income Tax Rates (%) 51

Table 38: US Lower 48 – US, Corporate Income Tax Rates (%), 1993–present 54

Table 39: US Lower 48,7-Year & 5-Year GDS Depreciation Rates (Half-Year Convention) (%) 55

Table 40: US Lower 48, Governing State Laws 57

Table 41: US Lower 48, State Lands Leasing Authorities 60

Table 42: US Lower 48, State Regulatory Agencies 62

Table 43: US Lower 48, Primary Term Duration for State Lands 64

Figures

1.2. List of Figures

Figure 1: Regime Flow Chart 9

Figure 2: US Lower 48, Indicative NPV10/boe, IRR, and State Take Comparison, Internal 10

Figure 3: US Lower 48, Indicative NPV10/boe, IRR, and State Take Comparison, Regional 11

Figure 4: US Lower 48, Legal Framework 56

Figure 5: US Lower 48, Institutional Framework 59

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