Texas Oil & Gas Association Mineral Sub- Committee ANNUAL - - PowerPoint PPT Presentation
Texas Oil & Gas Association Mineral Sub- Committee ANNUAL TXOGA PROPERTY TA TAX CONFERENCE FEBRUARY 18-19, 2020 Committee Members Brad Bailey Conoco Phillips Co Michael Horne Occidental Ron Kane EOG Resources
ANNUAL TXOGA PROPERTY TA TAX CONFERENCE FEBRUARY 18-19, 2020
➢Brad Bailey – Conoco Phillips Co ➢Michael Horne – Occidental ➢Ron Kane – EOG Resources ➢Damien Larsen – Stancil Property Tax ➢Lauro Porto- ExxonMobil ➢Randy Prince – Chevron ➢Rich Sanchez – Merit Advisors ➢Nathan Young – American Ad Valorem Tax Consultants
➢Meet to discuss valuation parameters ➢Schedule meetings with the Appraisal Firms ➢Summarize meeting discussions ➢Report to the Membership
▪Firm Summary File to be emailed once complete
➢Released on January 29, 2020. ➢§23.175 Texas Property Tax Code
▪Appraisal districts must use the EIA AEO data to calculate the Price Adjustment Factors for
EIA - Price Adjustment factor - AEO Report released January 29, 2020 Table 12 Prices in Nominal Dollars Table 13 Prices in Nominal Dollars Oil - WTI Spot Price Natural Gas - Henry Hub Spot 2020 Price 54.43 $ 2020 Price 2.49 $ 2019 Price 56.26 $ 2019 Price 2.57 $ MAF 0.96747 MAF 0.96887
Dec 19 STEO Jan 20 STEO Feb 20 STEO 2020 AEO 2020 Oil 55.00 $ 59.25 $ 55.71 $ 54.43 $ 2019 Oil 56.70 $ 57.02 $ 57.02 $ 56.26 $ 2020 PAF 0.9700 1.0391 0.9770 0.9675 Spot WTI Price - 2/11/2020 49.75 $ Dec 19 STEO Jan 20 STEO Feb 20 STEO 2020 AEO 2020 Gas 2.45 $ 2.33 $ 2.21 $ 2.49 $ 2019 GAS 2.59 $ 2.57 $ 2.57 $ 2.57 $ 2020 PAF 0.9459 0.9066 0.8599 0.9689 Spot HH Gas Price - 2/11/2020 1.79 $ EIA's STEO vs. AEO Oil - WTI Spot Price Natural Gas - Henry Hub Spot (MMBTU)
BLS - PPI Calculation for Oil & Gas - Full Year 2019 X = index figure for current year (Base year 1982 assumed to be 100) Y = number of years between 1982 base year and current year To determine average inflation rate over any particular time span: Inflation (%) = (X / 100)^ (1 / Y) - 1 Factor 157.8 85.6 Year 2019 2019 Escalator 1.2405%
Crude Oil Natural Gas
Year Oil Price Factors Notes Year Gas Price Factors Notes 2019 56.26 $ 2019 2.57 $ 2020 54.43 $ 0.96747 PAF 2020 2.49 $ 0.96887 PAF 2021 55.11 $ 1.01240 PPI 2021 2.48 $ 0.99581 PPI 2022 55.79 $ 1.01240 PPI 2022 2.47 $ 0.99581 PPI 2023 56.48 $ 1.01240 PPI 2023 2.46 $ 0.99581 PPI 2024 57.18 $ 1.01240 PPI 2024 2.45 $ 0.99581 PPI 2025 57.89 $ 1.01240 PPI 2025 2.44 $ 0.99581 PPI 2020 Tax Year 2020 Tax Year Oil - 23.175 Max Forecast Gas - 23.175 Max Forecast
➢CAG – Cooke & Val Verde Counties ➢P&A – Childress, Comal and Gillespie Counties ➢TYP – Coryell, Dallam, Gray, Hutchinson, Jasper and Kimble Counties ➢Reeves County – In House
➢Firms will use the 2020 AEO to determine the PAF for Oil & Gas Pricing.
➢Escalation from BLS – years 2-6
➢Firms indicated they will adjust discount rates from 2019 or adjust property specific. ➢Firms expect mineral values to decrease based on pricing scenario.
➢CAG – will use actual 2019 LOE. Lease operating costs categorized as fixed &
from .9 to 1.02 based on Oil Esc.) ➢P&A – will use 2019 actual or historic. Oil lease – de-esc 3% year 1,Flat year 2 thru 6. Gas lease – de-esc 3% year 1, hold flat all years until reaching economic limit. ➢TYP – Use 2019 actual or historical. LOE esc .8% for first 5 years then held flat for subsequent years until reaching the economic limit. ➢WAG – will use 2019 actual or de-escalate historical up to 20%. Will escalate .8% years 2-6 and hold flat until economic limit. ➢Requests sent to HLA & MAVSI
➢CAGI – Discount rate – S&D analysis – ValueLine Companies (15% Base Rate)
➢Min – 14.5% to Max 22%.
➢10 plus well units – reduce wells (1/2 decl *well count per year) ➢Website enhancements – Notices are now available on line. ➢Counties are requesting new copies of AOA’s. ➢New Counties – Cooke – Ken Hitt, Val Verde, Jeff Ronk
➢Retirements – Vic Henderson & Mac Jourdan, FTW – Mark Stewart, AMA ➢New Appraisers – Mason Patterson FTW, Malachi Ashley AMA ➢Calculates individual County base prices from Comptroller data. ➢Discount Rates – reduced 1% all properties ➢Equipment value – Discount rate reduced to 5% (2019 5.5%)
➢2020 value reductions – Est 15% decrease. ➢Discount rate – 1% increase – 16%. ➢Added Mack Jourdan for 2020 Mineral Appraisal.
➢Expects to increase discount rate. Rate to be finalized. ➢Requesting variable pricing WI vs. RI
➢RI – Free of deducts – higher price
➢Marketing costs – won’t use 100% reported ➢LaSalle – Support for low gas prices.
➢Identify Gas lift or EOR projects.
➢Drilling Permit wells
▪ Placing on Roll in appraisal cycle.
➢Unknown Interests
▪ Correction of prior year roll once identified.
➢County Crossover Leases – Value Allocation
▪ Leasehold acreage vs lateral length
THANK YOU