Tuesday, The Wyoming legislature’s Joint Minerals, Business and Economic Development Committee has sponsored a bill proposing tax relief for oil and gas companies in a bid to stimulate an increase in production. The bill, if approved, calls for tax exemption on oil production until the price of WTI reaches $45 per barrel. A year ago, Wyoming produced 102.1 million barrels of crude with 37 drilling rigs. “We’re recognizing that if [the] price is too low, companies are not going to come back anyway. So, we’re gonna set it at maybe a break-even to get a company over the hump to choose Wyoming over North Dakota, to choose Wyoming over New Mexico,” said the president of the Petroleum Association of Wyoming, Pete Obermueller, as quoted by Wyoming Public Media.
The bill, if passed, would cut the state’s mineral tax rate from 6% to 3% when oil and gas prices land above certain prices. The tax break only kicks in if the 12-month rolling average of oil prices falls below $50 per barrel, above today’s prices. For natural gas, the 12-month rolling average would need to be less than $2.95 per thousand cubic feet. Just last Friday, the rig count in Wyoming fell from 30 rigs in March to one lonely natural gas rig.
Although not one of the larger producers in the United States, Wyoming is headlined by the Powder River Basin. Running from Southeast Montana to Northeast Wyoming, the Powder River Basin appeals to companies looking for low land prices. Just three years ago, the PRB was the next big thing. Expected as the new Permian (which didn’t happen), this new tax relief may encourage drillers to take another look.
Guttman Energy Daily Market Update Disclaimer – The information contained in this market update is derived from sources believed to be reliable; however this update could include technical inaccuracies or typographical errors and Guttman Energy does not guarantee the accuracy, completeness or reliability of this update. FURTHERMORE, THIS UPDATE IS PROVIDED “AS IS,” WHERE IS, WITH ALL FAULTS AND WITHOUT ANY WARRANTY OR CONDITION OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY. GUTTMAN ENERGY ALSO SPECIFICALLY DISCLAIMS ALL EXPRESS AND IMPLIED WARRANTIES. YOU USE THIS UPDATE AT YOUR SOLE RISK. This update and any view or comment expressed herein are provided for informational purposes only and should not be interpreted in any way as recommendation or inducement to buy or sell products, commodity futures or options contracts.