Okla. Stat. tit. 68, § 68-1001.3a

exemptions.

A. As used in this section:

1. Prior to January 1, 2015, "economically at-risk oil or gas

lease" means any oil or gas lease operated at a net loss or at a net

profit which is less than the total gross production tax remitted

for such lease during the previous calendar year;

2. On or after January 1, 2015, and before January 1, 2022,

"economically at-risk oil or gas lease" means any oil or gas lease

with one or more producing wells with an average production volume

per well of ten (10) barrels of oil or sixty (60) MCF of natural gas

per day or less operated at a net loss or at a net profit which is

less than the total gross production tax remitted for such lease

during the previous calendar year;

3. For calendar year 2022 and subsequent calendar years,

"economically at-risk oil or gas lease" means any oil or gas lease

with one or more producing wells with an average production volume

per well of ten (10) barrels of oil or sixty (60) MCF or less of

natural gas per day operated at a net loss or at a net profit which

is less than the total gross production tax remitted for such lease

during the previous calendar year, and any oil lease operating while

the gross value of the production of oil is less than Fifty Dollars

($50.00), on an average monthly basis, based on a per-barrel

measurement of forty-two (42) U.S. gallons of two hundred thirty-one

(231) cubic inches per gallon, computed at a temperature of sixty

(60) degrees Fahrenheit or gas lease operating while the gross value

of the production of gas is less than Three Dollars and fifty cents

($3.50), on an average monthly basis, based on a measurement of one

million (1,000,000) British thermal units (MMBtu); and

4. "Lease" shall be defined as in Section 1001.2 of this title.

B. When certified as such pursuant to the provisions of this

section, production from an economically at-risk oil or gas lease

shall be eligible for an exemption from the gross production tax

levied pursuant to subsection B of Section 1001 of this title for

Oklahoma Statutes - Title 68. Revenue and Taxation Page 365

production on such lease during the previous calendar year in the

following amounts:

1. If the gross production tax rate levied pursuant to

subsection B of Section 1001 of this title was seven percent (7%),

then the exemption shall equal six-sevenths (6/7) of the gross

production tax levied; and

2. If the gross production tax rate levied pursuant to

subsection B of Section 1001 of this title was five percent (5%),

then the exemption shall equal four-fifths (4/5) of the gross

production tax levied.

C. For all production exempt from gross production taxes

pursuant to this section, a refund of gross production taxes paid

for production in the previous calendar year in the amounts

specified in subsection B of this section, subject to the

limitations and provisions specified in subsections D and J of this

section, shall be issued to the well operator or a designee. For

production in calendar years ending on or before December 31, 2015,

the refund shall not be claimed until after July 1 of the year

following the year of production. For production in the calendar

year ending December 31, 2016, the refund shall be claimed before

July 1, 2017.

D. For oil and natural gas produced from qualifying leases in

calendar years 2015 and 2016, the total amount of refunds authorized

in this section for each calendar year shall not exceed Twelve

Million Five Hundred Thousand Dollars ($12,500,000.00) for all

products combined. For oil and natural gas produced from qualifying

leases in calendar year 2022 and subsequent calendar years, the

total amount of refunds authorized in this section for each calendar

year shall not exceed Ten Million Dollars ($10,000,000.00) for all

products combined. If the amount of claims exceeds the limits

provided in this subsection, the Tax Commission shall determine the
oducts combined. For oil and natural gas produced from qualifying

leases in calendar year 2022 and subsequent calendar years, the

total amount of refunds authorized in this section for each calendar

year shall not exceed Ten Million Dollars ($10,000,000.00) for all

products combined. If the amount of claims exceeds the limits

provided in this subsection, the Tax Commission shall determine the

percentage of the refund which establishes the proportionate share

of the refund which may be claimed by any taxpayer so that the

maximum amount authorized by this subsection is not exceeded.

E. Any operator making application for an economically at-risk

oil or gas lease status under the provisions of this section shall

submit documentation to the Tax Commission, as determined by the Tax

Commission to be appropriate and necessary.

F. For the purposes of this section, determination of the

economically at-risk oil or gas lease status shall be made by

subtracting from the gross revenue of that lease for the previous

calendar year severance taxes, if any, royalty, operating expenses

of the lease to include expendable workover and recompletion costs

for the previous calendar year, and including overhead costs up to

the maximum overhead percentage allowed by the Council of Petroleum

Accountants Societies (COPAS) guidelines. For the purposes of this

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calculation, depreciation, depletion or intangible drilling costs

shall not be included as lease operating expenses.

G. The Tax Commission shall have sole authority to determine if

an oil or gas lease qualifies for certification as an economically

at-risk oil or gas lease. The Tax Commission shall promulgate rules

governing the certification process.

H. Except as provided in subsection I of this section, gross

production tax exemptions under the provisions of this section shall

be limited to production from calendar years 2005 through 2013 and

2022 and subsequent calendar years; provided, no claims for refunds

for calendar years 2013 and before shall be paid on or after

December 31, 2015.

I. Gross production tax exemptions claimed under the provisions

of this section shall be limited to production from calendar years

2014, 2015 and 2016; provided, no claims for refunds for the

calendar years 2014 and 2015 shall be claimed or paid more than

eighteen (18) months after the first day of the fiscal year during

which the refund is first available. For production in calendar

year 2016, no claim for refund filed on or after July 1, 2017, shall

be claimed or paid.

J. Claims for refunds pursuant to the provisions of this

section for production periods ending on or before December 31,

2016, shall be paid pursuant to the provisions of this subsection.

The claims for refunds referenced herein shall be paid in equal

payments over a period of thirty-six (36) months. The first payment

shall be made after July 1, 2018, but prior to August 1, 2018. The

Tax Commission shall provide, not later than June 30, 2018, to the

operator or designated interest owner, a schedule of rebates to be

paid out over the thirty-six-month period.

K. Claims for refunds pursuant to the provisions of this

section for production periods beginning and ending on or after

calendar year 2022 shall be paid in the form of a one-time payment.