This bill proposes amendments to the severance tax on newly drilled oil and natural gas wells in West Virginia, specifically modifying the tax rates applicable to these resources. The bill introduces a new provision that establishes a reduced tax rate of three percent on the gross value of natural gas and oil produced from wells drilled and completed after June 30, 2026, for a period of twenty-four consecutive production months from the date of first sale. Additionally, it maintains the existing tax structure for wells producing above certain thresholds, with a tax rate of five percent for high-producing wells and a lower rate of 2.5 percent for those producing between specified lower thresholds.

Furthermore, the bill outlines that the tax imposed is in addition to other taxes and specifies the calculation method for determining average production. It also includes a provision for the dedication of proceeds from the tax to the Oil and Gas Abandoned Well Plugging Fund, with a stipulation that if the fund reaches or exceeds $6 million, the special rate of tax may be reduced to zero for the following taxable year. Overall, the bill aims to incentivize the drilling of new wells while ensuring that the state can manage its resources effectively.

Statutes affected:
Introduced Version: 11-13A-3a