34 Tex. Admin. Code § 3.17 - Producer Reporting Requirements

(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Operator-The person responsible for the physical operation of the producing property.

(2) Interest owner-Any person owning an interest in the production.

(3) Taking in-kind-An election by a nonoperator to receive production in lieu of proceeds from the sale of production.

(4) Seller's agent-Any person, other than the operator, negotiating the sale of gas for, or on behalf of, interest owners taking their gas in-kind and separately selling or disposing of such gas.

(b) Persons required to file the producer's report and liability for the payment of the tax.

(1) All operators must file the producer's report showing the entire volume of production sold or delivered in-kind during the reporting period.

(2) The operator is primarily liable for the payment of the tax on production sold by the operator.

(3) An interest owner taking in-kind is liable for the payment of the tax on the production taken in-kind, and must file the producer's tax report.

(4) The operator must report and pay tax on the entire volume of production used by the operator for lease operations.

(5) The taxable unit value of gas used by the operator is the taxable unit value of gas sold by the operator. If no gas is being sold, then the taxable unit value of gas used is the taxable unit value of other like gas sold by the operator in the same field. If no like gas is being sold by the operator in the same field, then the taxable unit value of gas used is the weighted average taxable unit value of all like gas sold in the county as compiled by the comptroller.

(6) An interest owner is responsible for the payment of the tax on production taken in-kind and used by the interest owner.

(7) The taxable unit value of gas taken in-kind and used by an interest owner is the taxable unit value of gas taken in-kind and sold by the interest owner.

(c) For purposes of this section, interest owners ratifying the operator's contract are not considered to be taking in-kind.

(d) Any person designated as seller's agent for a group of interest owners taking in-kind shall file the producer's report as nonoperator for the interest represented by the seller's agent.

(e) Where delivery of gas is made to the first purchaser on the lease from which the gas was produced, the producer shall report the actual person purchasing the gas.

(f) If the first purchaser does not take delivery of gas on the lease from which it was produced, the producer shall report according to the following:

(1) for an off-lease delivery with title to the gas passing to the purchaser in Texas, purchaser taxpayer number 4-4444444-44-4;

(2) for an off-lease delivery with title to the gas passing to the purchaser outside of Texas, purchaser taxpayer number 5-5555555-55-5; or

(3) for an off-lease delivery with title to some of the gas passing to a purchaser in Texas and title to some of the gas passing to a purchaser outside of Texas, purchaser taxpayer number 6-6666666-66-6.

(g) If a producer commingles gas from more than one lease and delivers it to a purchaser, either on or off the lease, then the entire delivery shall be deemed to be an off-lease delivery.

(h) Condensate shall be reported by lease and the producer shall report the actual first purchaser of such condensate.

(i) Operators shall keep accurate, detailed records reflecting the following:

(1) the names and addresses of any interest owners taking production in-kind;

(2) the names and addresses of all first purchasers purchasing from the operator;

(3) the volume of production delivered in-kind each month to each interest owner;

(4) the volume of production sold by the operator each month to each first purchaser;

(5) the gross amount received under each sales contract between the operator and first purchaser; and

(6) the entire volume of gas and condensate produced from each property during the month.

(j) Interest owners who are nonoperators and are taking production in-kind shall keep accurate, detailed records of the following:

(1) the volume of production taken in-kind each month;

(2) the names and addresses of all first purchasers;

(3) the volume of production sold to each first purchaser;

(4) the gross amount received from each first purchaser; and

(5) the volume of any production used by the interest owner.

Notes

34 Tex. Admin. Code § 3.17

The provisions of this §3.17 adopted to be effective November 9, 1987, 12 TexReg 2847.