§ 202.062 — TAX EXEMPTION FOR OIL AND GAS PRODUCED FROM CERTAIN RESTIMULATION WELLS.

Texas § 202.062

• Jurisdiction: Texas
• Code TX: Tax Code

Text

Sec. 202.062. TAX EXEMPTION FOR OIL AND GAS PRODUCED FROM CERTAIN RESTIMULATION WELLS. (a) In this section:
(1) "Commission" means the Railroad Commission of Texas.
(2) "Consecutive months" means months in consecutive order, regardless of whether an oil or gas well produces hydrocarbons during any or all of those months.
(3) "Hydrocarbons" means the oil, gas, condensate, and other hydrocarbons produced from an oil or gas well.
(4) "Operator" means the person responsible for the actual physical operation of an oil or gas well.
(5) "Qualifying well" means a restimulation well that has been certified by the commission under this section as a qualifying well.
(6) "Restimulation costs" means expenses that are directly attributable to payment for the restimulation treatment performed on a restimulation well.
(7) "Restimulation treatment" means the treatment of an oil or gas well with an application of fluid under pressure for the purpose of initiating or propagating fractures in a target geologic formation to enhance the production of hydrocarbons from the well.
(8) "Restimulation well" means a previously completed oil or gas well that, following production of hydrocarbons, became an inactive well and subsequently received a restimulation treatment.
(b) This section does not apply to an oil or gas well that:
(1) has less than 60 months of production reported to the commission before the date a restimulation treatment is performed;
(2) is part of an enhanced oil recovery project, as defined by Section 89.002 , Natural Resources Code;
(3) is drilled but not completed and that does not have a record of hydrocarbon production reported to the commission; or
(4) is not an inactive well, as defined by Section 89.002 , Natural Resources Code, immediately before the restimulation treatment is performed.
(c) Hydrocarbons produced from a qualifying well are exempt from the taxes imposed by Chapter 201 and this chapter until the earlier of:
(1) the last day of the 36th consecutive month following the month in which the well first produces hydrocarbons after a restimulation treatment is completed; or
(2) the date on which the cumulative amount of taxes exempted under Chapter 201 and this chapter and any credit under Subsection (l) equals the lesser of:
(A) the restimulation costs described by Subsection (j); or
(B) $750,000.
(d) Notwithstanding Section 201.057 , gas produced from a qualifying well that was previously certified by the commission as a well that produces or will produce high-cost gas is not eligible for the tax reduction provided by that section during the period the gas is exempt from tax under Subsection (c) of this section.
(e) The operator of a restimulation well may apply to the commission for certification that the well is a qualifying well. The application may be made at any time after the first day the well produces hydrocarbons following the date a restimulation treatment is completed. The commission may require an applicant to provide any relevant information required to administer this section.
(f) If the commission approves an application submitted under Subsection (e), the commission shall issue a certificate designating the well as a qualifying well.
(g) The commission may revoke a certificate issued under Subsection (f) if the commission determines that:
(1) a well that was certified as a qualifying well is not a restimulation well; or
(2) the operator is claiming or has claimed an exemption under this section for hydrocarbons produced from a well that is not a qualifying well.
(h) The commission shall notify an operator that a certificate issued under Subsection (f) has been revoked. An exemption provided by this section is automatically revoked on the date the commission revokes a certificate unless the commission issues a new certificate for the well. Hydrocarbons produced from the well after the date a certificate is revoked are not eligible for the exemption provided by this section.
(i) To qualify for the exemption provided by this section, the person responsible for paying the tax must apply to the comptroller. The comptroller shall determine the form and content of the application, which must include:
(1) the certificate issued by the commission under Subsection (f); and
(2) a report of the restimulation costs incurred to perform the restimulation treatment on the qualifying well from which the hydrocarbons that are the subject of the application are produced.
(j) For the purposes of Subsection (i)(2), restimulation costs include only the current and contemporaneous restimulation costs associated with performing the restimulation treatment.
(k) The comptroller shall approve an application for an exemption provided by this section if the application meets the requirements of this section. The comptroller may require the person applying for the exemption to provide any relevant information necessary to administer this section. The comptroller by rule may establish procedures to comply with this section.
(l) If the tax imposed under Chapter 201 or this chapter, as applicable, is paid at the applicable rate on hydrocarbons produced from a qualifying well on or after the date the commission issues a certificate for the well under Subsection (f) but before the date the comptroller approves an application for an exemption for hydrocarbons produced from the well under Subsection (k), the person responsible for paying the tax is entitled to a credit against the taxes due under Chapter 201 or this chapter in an amount equal to the amount of tax paid during that period on hydrocarbons produced from the qualifying well. To receive the credit, the person responsible for paying the tax must apply to the comptroller before the expiration of the applicable period for filing a tax refund claim under Section 111.104 .
(m) A person who makes or submits an application, report, or other document or item of information to the commission or the comptroller under this section that the person knows is false or untrue in a material fact is subject to the penalties imposed by Chapters 85 and 91 , Natural Resources Code.
(n) A person who applies or attempts to apply for an exemption under this section for hydrocarbons produced from a well the person knows is not a qualifying well is liable to the state for a civil penalty. The amount of the penalty may not exceed the sum of:
(1) $10,000; and
(2) the difference between the amount of taxes paid or attempted to be paid and the amount of taxes due.
(o) The attorney general may recover a penalty under Subsection (n) in a suit brought on behalf of the state. Venue for the suit is in Travis County.
(p) The commission may adopt rules necessary to administer this section.

Legislative History

Added by Acts 2025, 89th Leg., R.S., Ch. 615 (H.B. 3159 ), Sec. 1, eff. January 1, 2026.