LOGA - latax.state.la.us · Re: 2015 Rules and Regulations Rebuttal —Chapters 3, 9 Dear Mr....
Transcript of LOGA - latax.state.la.us · Re: 2015 Rules and Regulations Rebuttal —Chapters 3, 9 Dear Mr....
LOGALOUISIANA OIL 6z GAS ASSOCIATION
July 24, 2014
FEDEX OVERNIGHT DELIVERY
Mr. Pete Peters, ChairnlanMr. Charles Carrico, MemberMr. Kenneth Naquin, MemberMr. Joey Vercher, MemberMs. Kay Kellogg Katz, MemberLouisiana Tax Commission5420 Corporate Blvd. #107Baton Rouge, Louisiana 70808
Re: 2015 Rules and Regulations Rebuttal — Chapters 3, 9
Dear Mr. Chairman and Members:
DON G. BRIGGS, President
The Louisiana Oil &Gas Association (LOGA) respectfully submits the enclosed rebuttal for tl~e 2015 Rules andRegulations. Copies, as required by the Louisiana Tax Commission, are provided to assist in the process.
We look forward to verUally elaborating on these important issues at the upcoming hearuig. If you have anyquestions please do not hesitate to contact our offices.
Respectfully,
Don G. BriggsPresident
LOGA is Louisiana's Oil ~ Gas IndustryPO BOX 4069 BATON ROUGE, LA 70821-4069 ZZ5.388.95Z5 300.443.1433 FAX: 225.338.9561
Cha ters 3 & 9p
Rebuttal Presented to the Louisiana TaxCommission Related to the 2015 Louisiana
Assessors Association Proposal
L~QLtISIANA OiL Sc GA$ r1S&O~CLAI'IQN
Table of Contents
Rebuttal of Pivach Letter Presented to the Louisiana Tax Commission
II. LOGA Rebuttal of Chapters 3 & 9
III. Exhibit A — Instructions and Definitions for Drilling Costs
IV. Exhibit Al —Fair Market Value Explained
V. Exhibit B — Comparison of Texas &Louisiana
VI. Exhibit C — Comparison of Current to Proposed LTC Assessments
VII. Exhibit D — Louisiana Parishwide Millages
VIII. Exhibit E1 — Impact on Haynesville Well 1
IX. Exhibit E2 — Impact on Haynesville Well 2
Rebuttal of Pivach Law Firm Letter
BEFORE THE
LOUISIANA TAX COMMISSION
LTC DOCKET NO. RR-2015
IN RE: IN CONSIDERATION OF AMENDINGAND/OR ADOPTING PERSONAL PROPERTY
RULES AND REGULATIONS FOR CHAPTER 9, OIL AND GAS
MEMORANDUM IN REBUTTAL OF PROPOSAL OF THE LOUISIANA ASSESSORSASSOCIATION ON BEHALF OF THE LOUISIANA OIL AND GAS ASSOCIATION
Pursuant to the Commission's Notice regarding its annual Rules and Regulations
Sessions, the Louisiana Oil and Gas Association ("LOGA") submits this response in rebuttal to a
proposal submitted by the Oil and Gas Committee of the Louisiana Assessors Association
("LAA") regarding the calculation of the value of oil and gas wells for purposes of ad valorem
property taxation. In their Memorandum, the LAA argues that the answer to the historical debate
regarding the proper cost structure of oil, gas and other wells for taxation purposes can be found
in basic principles of appraisal. The LAA proposes that the Commission use one hundred
percent (100%) of the drilling costs as gathering by the American Petroleum Institute ("API") in
its Joint Annual Survey of drilling costs ("JAS"). This approach, the LAA contends, focuses on
the proper calculation of "replacement cost —new" of a well.
While the LAA represents that this approach is different, the reality is it is the same
proposal that has been promoted by the LAA for many years. ~ As such, the current proposal
suffers from the same deficiencies as the prior ones. Simply stated, the drilling cost data
~ See, for example, Submission on Behalf of the LAA by Pritchard &Abbott on July 9, 2010 forthe Tax Year 2011. In that proposal, the LAA also proposed that the Commission adopt 100% ofthe drilling costs determined by the API's JAS as it purportedly more accurately reflected the"replacement cost —new" of oil, gas and other wells under appraisal principles.
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gathered by the API in the JAS captures, and thus reflects, costs that are not subject to ad
valorem taxation under the Louisiana Constitution, the relevant statutes and the applicable case
law. Thus, for the reasons set forth below, and in many prior rebuttal memoranda submitted to
the Commission by LOGA and other taxpayers, if the Commission determines to use the API's
JAS as the source of drilling cost data for determining the fair market value of the table
portion of a well, the Commission should only use a percentage of those costs (which reflect the
property that is taxable) to construct Tables 907.A-1, 2 and 3, and that percentage should most
likely be less than the 40%used in 2014.
A. THE LOUISIANA CONSTITUTION IS THE PROPER STARTING POINT.
While the LAA has focused on definitions relating to appraisal techniques, the obvious
starting place for any analysis of the proper method of determining what property is subject to ad
valorem property taxes and how to value that property is the Louisiana Constitution. Article VII,
Section 18 of the Louisiana Constitution of 1974 limits what ad valorem taxes may be imposed
on property and defines how property is to be valued for ad valorem tax purposes. Specifically,
in Subsection A of Section 18, the Constitution provides that:
Property subject to ad valorem taxation shall be listed on theassessment rolls at its assessed value, which, except as provided inParagraphs (C) and (G), shall be a percentage of its fair marketvalue.
See La. Const. Article VII, Section 18(A). In Subsection B, the Constitution classifies the
property that is subject to ad valorem taxation and the percentage of fair market value applicable
to each classification. Under the Constitution, land, improvements for residential purposes,
electric cooperative properties, associated service properties and "other" property are defined to
be subject to ad valorem taxation. The determination of where a particular type of property falls
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within those classifications is typically a routine matter for most types of property. The same
conclusion cannot be so simply reached for oil and gas properties.
As shown by the annual filings by both the LAA and taxpayers regarding the
Commission's Rules and Regulations, the continuous debate about the proper methodology of
valuing the part of the well that is subject to ad valorem taxation must be resolved considering
the prohibition in Article VII, Section 4(B) of the Louisiana Constitution of 1974, The relevant
portion of that section of the Constitution permits the levy of a severance tax on natural
resources, but also imposes a significant restriction by declaring that "no further or additional tax
or license shall be levied or imposed upon oil, gas, or sulphur lease or rights."z This
Constitutional prohibition limits the ability of the Legislature, this Commission and Assessors to
impose any taxes on oil and gas "leases or rights." This clear prohibition must have meaning,
and its breadth has been explained by the Louisiana Supreme Court.
In Bel Oil Corp. v. Fontenot,3 the Court considered a challenge to a gas gathering tax
which levied "upon every person engaged in gathering gas produced in the State an excise
license or privilege tax, for the privilege of engaging in such business."4 The statute defined
"gathering gas" to mean "transporting gas, after its severance, from the well to the first. meter at
or near the well." The Supreme Court, in affirming the district judge's decision, found that the
gas gathering tax was clearly prohibited by Article X, Section 1 of the Louisiana Constitution of
1921 (which contained the same prohibition on additional tomes on "oil and gas lease or rights"
that exists in the current Constitution, see La. Const. Art. VII, § 4(B)). The Court concluded
2 Emphasis added.
3 238 La. 1002, 117 So. 2d 571 (1959).
4 La. R.S. 47:671 (repealed by Acts 1998, No. 27).
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that, although labeled as a "gas gathering" tax, the activities to be taxed involved a process which
formed "an integral part of the severing of the natural resource or reducing it to possession and
as such must be struck down."5
In their proposal, the LAA very clearly describe the scope of the costs that they seek to
have included in the value of a "well" for tax purposes. In their proposal, the LAA state as
follows:
Considering the taxable property composing the well, then, whatcosts would be incurred to construct property of the same utility?In regards to the well's sub-surface equipment, these costs wouldinclude all costs incurred in getting the sub-surface equipmentinstalled below the ground such that it is capable of serving thewell. In addition to the cost of materials, these costs wouldnecessarily include cost related to planning, site preparation,transportation, drilling, logging the hole, running and cementing,casing, installing any piping or tubing, hauling materials orequipment, etc.
See LAA Proposal at 4 (Emphasis in original).
Under Louisiana law, many, if not most, of the activities that the LAA seeks to include in
determining the "cost" of a well are necessary, and required for the owner of the land, or an
operator, to explore for and hopefully produce minerals. Because, under Louisiana law,
ownership of land does not include ownership of any oil and gas below the land,6 all a property
owner possesses is "the right to explore and develop one's property for the production, of
minerals, and to reduce minerals to possession and ownership...."~ Indeed, under Louisiana law,
"the vesting of title to fugitive minerals, such as oil or gas, occurs when the minerals are reduced
5 See 117 So, 2d at 573.
6 See Frey v. Amoco Production Company, 603 So. 2d 166, 171 (La. 1992).
~ Id.
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to possession at the wellhead."8 If the right to gather, measure and produce gas is protected
from additional taxation as the Supreme Court specifically concluded in Bel Oil, all of the
activities that allow an operator, or property owner, to exercise the only true right that they have
with respect to minerals (i.e. the exploration and possible development of their production) must
also be protected by the same Constitutional prohibition.
The Commission has looked to the API's JAS as a starting point for determining the
appropriate cost basis for valuing oil, gas and associated wells. However, recognizing that the
JAS survey (just like the LAA's proposal) includes cost items that do not lead to the creation of
taxable property and are so closely tied to the rights associated with the exploration for oil and
gas that their taxation is prohibited by the Constitution, the Commission has found it appropriate
to only use a percentage of the total drilling costs reported in the JAS to construct the cost
schedules in Section 907.9
B. THE ONLY PARTS OF AN OIL AND GAS WELL THAT ARE TAXABLE ARE THECORPOREAL MOVABLES.
In its proposal, the LAA agrees that only the corporeal movable property related to an oil,
gas or associated well is subject to ad valorem taxation. The LAA, however, proposes that the
Commission use one hundred percent (100%) of the JAS drilling costs to create the tables in
Section 907. A review of the cost components of the JAS survey, as shown by the instructions,
clearly reveals that the majority of costs gathered in the JAS survey do not relate to corporeal
movable property, but instead encompass many activities that are directly tied to, and are a part
8 Id. (Emphasis added}. See also La. R.S. 31:7 ("Minerals are reduced to possession when theyare under physical control that permits delivery to another." )
9 In Section 907(A), the Commission's Rules provide that "[t]he Cost-New Schedules belowcover only that portion of the well subject to ad valorem taxation."
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of, the rights to explore for and develop oil and gas properties. The instructions and definitions
that accompany the JAS survey instruct each operator as follows:
10. TOTAL COST. Report the TOTAL (tangible and intangible)of each well completed by you as operator in the survey year(whether actually drilled by you or drilled for you by contractors).The TOTAL of such costs should be reported even though you asoperator had only a part of a working interest in the well.
Do not report costs of wells drilled by others in which you had aworking interest regardless of the size of such interest. The coststo be reported are those associated with wells which are completedduring the survey year and tlae dollar aurora:t to be reported is tlaerrcc~in:ttlated cost of such wells from the tinge locatio~zs weremade «ntil the wells were completed as prod«ctive wells oraba~tdo~zed after drilling was tertni~zated because they were iaon-productive.
In general, the elements contributing to reported costs are theexpenditures for drilling dry holes and productive wells andequipping new productive wells through the "Christmas tree"installation. More specifically, these costs elements are the costsof Cabor, materials, supplies, water, filets, power, and directoverhead (i.e. field, district, and regio~tal), for s~sch operatza:s assight preparation, road building, erecting astd dismantlingderricks and drilling rigs, drilli~tg hole, rrcnr~irag and cementingcasir:g, haulm:g tnaterials, etc. Include the total cost of water, ifpurchased, or cost of water well, if drilled and chargeable to oil orgas well drilling operations. Well costs also include machineryand tool charges and rentals, and depreciation charges, whereappropriate, for rigs and other equipment and facilities which willbe used in drilling more than one well. Deduct the condition valueof materials salvaged after use where appropriate.
Do not report the cost of leased equipment such as artificial liftequipment and downhole lift equipment, flowlines, flow tans,separators, etc., that are required for production.
Do not reduce the cost by test well, bottomhole, or dryholecontributions.
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See "Instructions and Definitions for Drilling Costs" for the API's JAS, attached as Exhibit "A"
(Emphasis added). A simple review of the types of costs that are included in the JAS survey
establishes that the LAA is overreaching in its proposal. While the LAA has postured its
proposal as one based upon appraisal principles, it overlooks the fundamental interplay between
the two sections of the Constitution cited above.
In addition, the LAA's proposal specifically seeks to include some notion of value related
to the "utility" oil and gas wells. The LAA once again points to appraisal principles to support
its position. In fact, the LAA contends that it is the "utility" of the downhole equipment that
gives it its value, and that value is best determined by the total cost of putting that equipment in
place. In their proposal, the LAA represents that "the utility of the well's taxable property is
obvious —all of the property together serves to operate the well and produce oil and gas to the
satisfaction of the owner." See LAA Proposal at 4. Without doubt, when viewed against the
backdrop of the competing Constitutional issues, one can hardly dispute that the result of the
LAA's proposal is the inclusion of costs directly related to the right to explore for and develop
oil and gas rights. Undoubtedly, associating any costs related with an operator's exercise of that
right, and the resulting utility of the oil and gas well, is not permitted.
The decision of the Supreme Court in Meyers v. Flournoy10 does not provide otherwise.
In that case, producing gas wells and equipment located on an oil and gas lease were assessed
for ad valorem takes on the piping, tubing, gathering the lines, derricks, pumps and other
equipment used by the owner of the wells in operating them. In concluding that the
Constitutional prohibition did not reach the property at issue, the Supreme Court stated:
All that tlrey have done, or attempted to do, followi~zg thei►tstructions of the Louisiafta Tiix Commission, is to levy and
10 25 So.2d 601, 209 La. 812 (La. 1946).
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attempt to collect a tax on the pipi~ag, tubing, gathering tlae lines,derricks, pumps and otJter equipment used by plai~atiff inoperating his gas wells.I 1
In the Meyers case, the Supreme Court found that the taxation of oil and gas equipment
(i.e, corporeal movable property) was taxable. It is of note that the Assessor painstakingly
avoided any attempt to tax the well bore or the cost of drilling the well.lZ As instructed by the
Supreme Court in Meyers, only corporeal movables associated with an oil and gas well are
subject to ad valorem taxation under the Louisiana Constitution. Under the Louisiana Civil
Code, corporeal movables are "things, whether animate or inanimate, they normally move and
can be moved from one place to another." See La.C.C. Article 471.13 A review of the
instructions of the JAS clearly indicates that the majority of the costs that are to be included do
not qualify as corporeal movable property. Instead, they are directly related to the exercise of the
rights of the operator or leaseholder to explore for and develop oil and gas production.
CONCLUSION
For the reasons set forth above, LOGA opposes the proposal made by the LAA to use
one hundred percent (100%) of the JAS in creating the cost tables in Section 907 of the
Commission's Rules and Regulations. Over the years, the LAA, LOGA, other taxpayers and the
Commission have sought to find the best, and most equitable, method of determining the fair
11 See 209 at 821-22, 25 So. 2d at 603-04. (Emphasis added).
12 See Silurian Oil Company, Inc. v. Fuselier, 230 So. 2d 121(La. App. 3 Cir. 1969) (finding thatthe only thing that could be sold at a tax sale of an oil and gas well was the movable equipmentas the well itself nor the lease or any of the interest could have been sold because this type ofproperty is exempt from ad valorem taxation).
13 "Corporeal movable property" as defined in the Civil Code is synonymous with the term"tangible personal property" as used in the Tax Code. See Sommers v. Secretary, Department ofRevenue and Taxation, 593 So. 2d 689, 692 (La. App. 1 Cir. 1991), writ denied, 594 So. 2d 877(La. 1992).
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market value of the corporeal movable property that is subject to ad valorem taxation, With
respect to the cost approach, LOGA believes that the current Rules and Regulations adopted by
the Commission, and in place for prior years, results in a value in excess of fair market value for
the corporeal moveable property that is subject to ad valorem taxation under the Louisiana
Constitution. Furthermore, if any portion of the LAA proposal is adopted, the result would be a
movement further away from fair market value.
Respectfully Submitted,
J .ADAMS, III (#23617)A DRE B. BURVANT (#23982)J nes Walker LLP201 St. Charles Avenue, Suite 5100New Orleans, Louisiana 70170-5100Telephone: (504) 582-8000Facsimile: (504) 582-8012
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LOGA Rebuttal of Chapters 3 & 9
LOGA Rebuttal to the 2015 LAA Proposals
For many years, the Louisiana Oil and Gas Association (LOGA) has presented rebuttalcomments related to the Louisiana Assessors' Association (LAA) proposals. Whilenormally kept as brief as possible, LOGA has been very clear in its position that neitherthe current system of assessment nor the proposed changes by the LAA reflect themarket value of the oil &gas wells or surface equipment. There must be a significantchange in the approach to assess the oil &gas assets to move towards fair marketvalue. The LOGA proposal to change the methodology, to open the idea of doingsomething different, is one possibility to end the years of arguing over the existingsystem.
The assertion by the LAA that industry has special exemptions, or possibly even omittedproperty, is not accurate. The wells are currently assessed, in most instances, at avalue in excess of the fair market value. If any portion of the LAA proposal is adoptedby the Louisiana Tax Commission (LTC), the assessments will move even further fromfair market value.
The rebuttal that follows is presented for Chapter 3 (Forms) and Chapter 9 (Oil &GasProperties).
Chapter 3
The changes suggested in Chapter 3 by the LAA alter the LAT 12 form and adapts it tothe proposal submitted for Chapter 9. LOGA feels the changes requested by the LAAfor Chapter 9 are unwarranted, thus the changes to the LAT 12 are opposed.
Chapter 9
Oil &Gas Wells (Subsurface Equipment)
As both LOGA and the LAA recognize, the debate over the assessment of oil &gaswells has been a divisive issue for over 20 years. Central to the debate is the issue ofthe taxability of the hole drilled on leased land to produce the oil &gas. The LAAcontinues to take the position that all costs to develop wells result in taxable personalproperty, now deemed "the stufF'. For 2015, LOGA has been asked by the LAA toignore the hole and consider it part of the value of the stuff in use. LOGA is notprepared to accept that all costs result in taxable personal property.
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What seems to get lost every time the calculation is discussed is the end goal, fairmarket value. The entire discussion shifts to the so called 60% exemption in thecalculation, or the treatment of the lateral portion of horizontal wells. The simple truth isthat there is no exemption, underassessment, or omitted property since the valuesassessed currently exceed the market value of the personal property in most, if not all,cases.
Rather than go into specific detail on every parameter of the LAA proposal, LOGAwould like to focus on two things: Fair Market Value and Common Sense. Those twosimple ideas should be the measurement of the assessment, not the philosophicaldifference of the makeup of a calculation.
Fair Market Value —Any discussion of ad valorem assessment has to begin with fairmarket value and its application to the properties in question. Exhibit Al provided inthis rebuttal presentation explains fair market value in Louisiana. Upon a completereading, it is clear that the standard in Louisiana is similar to that of most other states.Summarized, it is what a willing buyer and willing seller would agree to as value forsome asset.
Common Sense —The concept of common sense is familiar to us all. The end result ofall the calculations and analysis of the assessment of the oil &gas wells should makecommon sense to someone in the business or someone familiar with the business.
The exhibits discussed below have been prepared by LOGA to look at the currentsystem and the 2015 LAA proposal to see if the ideas of fair market value and commonsense are apparent in the end result.
Exhibit B is an analysis comparing wells assessed in Texas, using the incomeapproach to assess 100% of the mineral value and all equipment, to the LAA proposalfor the value of equipment only. Over the years, there has been a hesitation to acceptthese comparisons from LOGA by the LAA. However, with the request that LOGAaccept the use value of the stuff and recent comments by members of the LAA that theywish to assess wells as in other states, it seems reasonable to compare the results.
The blue highlighted column shows the 100% fair market value for minerals andequipment in Texas. The total value for these wells, minerals and equipment, isapproximately $34MM. The current LTC guidelines for Region 1 on the same wellsvalue the equipment only at $21 MM, or about two-thirds of the value in Texas. That is avery high percentage of equipment to minerals on producing properties. If you followthe highlighted purple totals, you will see that if Region 2 or Region 3 schedules wereapplied, the resulting equipment values would exceed the Texas total values. The basic
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Texas calculation would not change by well geographic location, so the comparison stillapplies reasonably. Following over to the highlighted blue totals, you will see that the2015 LAA proposal values the Region 1 equipment at $121 MM, $87MM more than theTexas value of both minerals and equipment. The Region 2 and Region 3 schedulesproposed would also greatly exceed the Texas values.
While it may be simple to say it is done differently in Texas, the income approach tovalue is the methodology used by companies to purchase wells, not the cost to drill.The fair market value is tied to the ability of the well to produce income, which is nottaxable for ad valorem purposes in Louisiana. It does not make common sense that thecost approach to value should be so much higher than the income approach onproducing wells.
Exhibit C is an analysis to show the comparison of the 2014 assessments on a sampleof wells from across Louisiana to the 2015 LAA proposal. These wells were randomlyselected to provide an appreciation for the impact of the proposed calculation changes.The values calculated are not meant to tie directly or signify in any way the actualassessments on the parish tax rolls. Actual data was not requested from theoperators. The comparison is to show a resulting change from a static data setonly.
The increases in these wells vary, but most were significant. In fairness, there is onewell that stays flat and two with slight reductions in value. Using the parish widemillages from the LTC (Exhibit D), the taxes were estimated to show the bottom lineresult. The taxes on the sample would be three times higher for 2015 than 2014. Whilevalue, not taxes, is the focus of the LOGA rebuttal, the fiscal impact to taxpayers shouldbe considered in any rule changes.
Exhibits E1 & E2 (4 pages each with support) were created to show the dramaticimpact the 2015 LAA proposal would have on the Haynesville wells. The issue of theassessment of these horizontally drilled wells has become one of or possibly the mostaggressively debated issue for the last few years. The LAA suggests that since thecalculation in the LTC Rules &Regulations does not specifically include the footage inthe lateral that fair market value is not achieved for the well. Again, the end result is thetest, not the philosophical differences over the makeup of the calculation.
Exhibit E1 is an actual well pulled from SONRIS. The 2015 LAA proposal was appliedto the well to measure the accuracy of the end result across any given year of the well'slife. Since the well was completed in 2009, that is the year highlighted for the 2015schedule.
A very simple test of the assessment is the measurement of ad valorem taxes as apercentage of gross income. Typically, the percentages of ad valorem taxes to gross
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income would be 2% to 6% in producing states. Variances in appraisal methodologiesand millage rates impact the final result. The highlighted row for this well shows that theassessment for 2015 using the LAA proposal would be over 24% of the 100% gross
income, and over 32% of the WI gross income.
Exhibit E2 is another well pulled from SONRIS to test the result again. This well, drilled
in 2010 could expect to pay 44% of the 100% gross income and over 58% of the WIgross income to ad valorem taxes.
Does it seem reasonable or make common sense that any operator would drill a well orbuy an existing well with ad valorem taxes in the range of 24% to 44% of the 100%gross income? The fair market value is clearly overstated for the horizontal wells in theLAA proposal.
The exhibits above show that the LAA proposal will succeed in raising assessments, butwill not begin to approach a reasonable fair market value for wells. LOGA does notbelieve that any tweaking of the current system, including the sweeping changesproposed by the LAA, can result in fair market value assessments for wells.
Oil &Gas Surface Equipment
Though the debate over the assessment of the oil &gas surface equipment has beenless contentious than the wells, it has nonetheless been going on as long. Based on areview of the current LAA proposal, the debate will continue. The LAA proposal for2015 recommends changes to the current LTC Rules &Regulations regarding themethod of depreciation, the depreciation floor, the inclusion of additional installationcost, and the trending of additional installation costs, which LOGA will address in thisrebuttal.
Method of Depreciation — Currently, the surface equipment is depreciated based onthe age of the wells served. Recently, there has been a lot of public criticism of thecurrent approach by the LAA and their representatives.
The history of the approach may not be fully understood by participants newer to theLTC hearing process. Additional knowledge of the origin might add some insight that isuseful to fully appreciate the issue.
Until the early 1990's, the wells and equipment were not depreciated over time as theyare now. When the depreciation of the wells and equipment began to be part of theLTC Rules &Regulations, there was a great deal of discussion over how to determine
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the depreciation of the surface equipment in a fair and simple manner. The idea ofindividual item depreciation by actual age was dismissed quickly as a reasonableapproach due to the detail and added work it would cause both the assessors and thetaxpayer. The idea to depreciate based on the age of the wells served was advanced,since the well had a definite identifiable age, tied to the serial number. The thought wasthat some new wells would have old equipment, some old wells would have newequipment, but in the end it would balance out. The approach was not an industry ideato reduce assessed values, but an agreed-upon approach by industry and theassessors.
The 2015 LAA proposal asks the LTC to adopt rules that would require the operator toreport actual age on the equipment, if known, and use the average age of the wellsserved, if not known. There are several problems with what has been presented as asimple, matter-of-fact request.
• The change would complicate the filing of the LAT 12 forms as well as the reviewand assessment by the parish assessors' staff.
• Many operators have no idea of the actual age or original purchase date of theequipment on their sites. Equipment acquired in field wide purchases, or in theused equipment markets may be impossible to identify in that manner.
• The "either/or" methodology will create an inequality in the assessment of wellequipment.
• While it has been presented as optional, there is significant concern that it will bedeemed mandatory by some parishes. Companies in those parishes may beunable to comply adequately and deemed to be filing incomplete forms.
• The LAA seems willing to accept the actual age, when known, in cases whereassessments increase. Will it be optional for the assessors to accept the data ifvalues decrease?
In addition, much has been made about the equipment that had to be replaced afterhurricane Katrina in particular and how it is getting some unfair discount under thecurrent methodology. The equipment that was replaced on the platforms was done soafter an act of nature, not by choice of the operators to enhance value. The operatorsof those platforms had to bear considerable loss in revenue while rebuilding, cleanupcosts to remove the damaged equipment, and the cost of replacing equipment. Does itmake common sense to stack additional ad valorem taxes on the equipment, withoutsome consideration for those significant lost dollars?
The alternate side of the discussion that has not been addressed by the LAA is theparishes with new wells and the potential loss in value. Some equipment has significantlead times when ordered. To make sure that the equipment is ready when the wells aredrilled, the equipment is purchased in advance and brought to site when needed. That
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difference in time will result in accelerated depreciation for that equipment compared tothe wells, reducing assessed values.
As was understood by all involved when the current methodology was put in place,there are instances where assessments would be higher or lower if actual age wereused.
Depreciation Floor— Over the years, the depreciation floor for the wells and surfaceequipment has been continually discussed. The LAA has requested the floor be raisedfrom 20% to 30%. The premise discussed over time to support this position is that oil &gas equipment is somehow maintained to a higher standard than most other types ofequipment.
Most, if not all, other personal property in Louisiana is depreciated to a 20%floor. It isdifficult to accept that a piece of equipment on a well site is better maintained thanmachines in a hospital, keeping people alive.
Additional Installation Costs and Trending of Those Costs — Included in the LAAproposal for 2015 is the addition of installation costs to the LTC Rules and Regulationsfor surface equipment. The LAA position is that the costs used in the guidelines areexclusive of installation.
As was discussed in the LAA presentation in July, the starting point for many of thecurrent costs related to surFace equipment in the rules was provided by industry in 2006.It was also stated that nobody currently participating in the presentation for LAA was inthe room during the data exchange or discussion in 2006. Current members of theLOGA Tax Committee were participants in providing the data submitted. The dataprovided by industry was inclusive of all costs. Any additional costs added would be adouble assessment.
The trending of additional installation costs would merely be increasing the level ofdouble assessment to current dollars.
Conclusion
The proposals submitted by the LAA for Chapters 3 & 9 do nothing to move theassessment of oil &gas assets closer to market value. LOGA respectfully requests thatnone of the LAA proposed changes be adopted.
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Exhibit A — Instructions and Definitions forDrilling Costs
INSTRUCTIONS RND DEFINITIONS FOR DRILLING COSTS
WELLS TO BE REPORTED. ReporC each tlomesgc wellcompleted by you as OPERATOR (whether equally drilled by youor drilled for you by a contractor), In the survey year. Report eachwell completed by you as operator regardless of the size of yourworking interest fn the well. Do not report wells dulled by others- inwhich you may have had only a part of a working interest regardlessof the size•of sugfi interest. Do not report wells started In trio surveyyear or In prier years,. but not completed as of December 31 of thesurvey year. Do not ~aport wells raenlered for oompleUon atshallower depths, old well. drilled deeper, old wells worfced over,stretigraphic tests, core test, or service wells (Inoluding Input wells),
SH. Enter "SW"' IF well Is located in state offshore waters; enter"FW" if well Is located in federal offshore waters; ent~t "ON" (t it Isonshore. An offshore well is one which Is bottomed at, or producesfrom, a point which Iles seaward of the coastline, If a state agencyuses a different basis for classifying onshore and offshore wells, thestate classification should be used. In goneral, the tams "coesUine"means the pne of ordinary low water along that podion of the coastwhich Is in direct contact with the: open sea or the Ilne marking theseaward limit of Inland waters. For the purp6ses of the JAS, CookInlet (Alaska) Is classified as "offshore,
3. WHLL IDENTIFICATION NUMBER, Enter the STA'f~DESIGNATED API NUMBER If it is evallable. Where states do notassign APl well numbers, or If you do not know the number, leavethis Item blank,
4. TYPE.. Insert the classlficatlon for each well reported as either anexploratory (EXP) or a development (DES well. Exploratory wellsinclude new•fleld wildcats, deeper-pool tests, shallower-pool tests,and outposts (extensions). Develapmelit wells Include all wellsdrilled to produce aU and gas iPom pools discovered by previousdrilling.
Subclasslty all wells either oil, .gas or dry holes, e.g, "EXP-Oil","DEV•GAS", "EXP-DRY". An oIl weld Is a well completed for theproduction of crude oil from et least one.oil zone or reservoir, A gaswell Is one wi~ich can produce hydrocarbons existing initially in agaseous phase in the reservoir. So-called gas condensate wailsshould be reported as gas. walls, A dry' hots fs en exploratory ardevelopment well found to bs Incapable of producing either oA orgas In sufficfertt quantities to Justify completion as an oil or gas wail.The stete.regulatory classlflcatfbn should be used, If available; fPnotavailable, use a ciasslficatlon by company engineers.
Count MULTIPLE COMPLETIONS as one well,. (See Item 5 fordefinitlon,)
5. OIL ZONES, GAS ZONES. .Enter the {oral number. of separatelyproducing oil zones and. gas zones (reservoirs).
As noted under (item 4, a multiple completion should be repotted asone well, A multiple completion. well Is a we11 equlpp~d to produceail and/or gas separately from more than one reservoir, SUCHWELLS CONTAIN MULTIPLE STRINGS OF TUBINC3 OR OTHEREQUIPMENT WHICH PERMIT PRODUCTION FROM THEVARIOUS COMPLETIONS TO BE MEASURED ANDACCQUNTED FOR SEPARATELY,.
Report a multiple completion well as an oil Well if oil Is producedfrom at least one of several zones, even though gas and gascondensate may be produced from one or more zones (n the slimewell. Report a multiple completion well as a gas well if oil is notproduced from any of the several zones,
For a dry hole enter fhe word "DRY".
6. DEPTH. Report-for each well the total feet of penetration measureddown the: well bore. Include afi plugged beck footage, but excludebypassed footage resulUnB from remedial sidetrack d~fllingopergtlons. For OFFSHaRE WELLS drilled. from a plaUorm or eharge overwater and the reference point fs above Water, the depthof iha water (s Included in the total length of the wall hors:
7, COMPLETION DATE, Enter the month end year of compleflon.
8. SECTION, TWP, RANGE. Enter location data if appropriate forarea.
9, COUNTY NAME AND LOCATION, For each onshore well reportedprovide the country name, end for state and federal offshore watersprovide pseudo-county names. Under location antes the. designatedblock numbers For state end federal offshore walls and any otheravailable information that would ba helpNl In Identifying welllocations.
t0. TOTAL .005T. Report the-TOTAL cost (tangible and Intangible) ofeach wail completed by you as operator In the survey year (Whetheractually tlriilad by you or drilled for you by contractors), The TOTALof such oosls should be reported even though you as aperetor hadonly a part of e working Interest In the well.
Do not report .costs of wells drilled by others to which you had aworking Interest regardless of the size of such InlBresL The costs tobe reported are those assoclAted with wells which are completeddur(ng the survey year and the dollar amount to be reported Is theaccumulated cost of such wells from the time locations were madeuntil lha wells- were' completed as praductWe wells or abandonedotter dr1111ng was terminated because they were non•productive.
PLEASE -ROUND OFF TOTAL COSTS TO THE NEARESTDOLLAR.
In general, the elements contributing to repoAed .cost are theexpenditures for drilling dry. holes and producilve wells andequlppMg new productive wells through the "Christmas tree"Installation, More sp9ciflaally, these cosi.elements are the costs oflabor, materials, supplies; water, fuels, power; end direct overhead(I.e., field, district, and regional), Cor such operetlons as sitepreparation, road. bu.flding, erecting and dismantling derrfcics anddrll~ing rigs, drilling hole, running and cementing Cesing, haulingmaCeriais, etc, Include the total cost of water, if purchased, or costof water wall, If drilled and chargeable to oil of gas Well drillingoperations. Welt costs also Inolude machinery and tool charges andrentals, and depreclatlon charges, where appropriate, for r(gs endother equipment and facflRfea which will be used In drilling morethan one well, Deduct the condition value of meterials.salvsgedafter use where appfopriate.
Oo not report .the cost of lease equipment such as artificial Ilkequipment and downhole lift equipment, flow Ilnes, flow lens,separators, etc., that are required for production. Do not reduce thecosts by test welt; bottom hole, or dry. hole contributions.
For•: OFFSHORE WELCS,~ Include~'cosfs; on ~f(xed' platfoRris andislands:. Y!1Re~e'faollities~s~rve'more than one'well, tfie costs should6'e allocated to'each wetl.on'the ti'asis:'of ~Fi~'o'perators, best~cUYrent~sGmat~ o(;the uitimefe number of wells .thef wll[ use the;fec~lty.Also, ,Include.,;cosR•;'expirailoNs'.~(c~epreclaklon..or'; nmortlzetlorij. forcompany:owned'mobile~Platfomis•'barges and Genders,
Exhibit "A"
Exhibit Al -Fair Market Value Explained
FAIR MARKET VALUE
In Article VII, Section 18 of the Louisiana Constitution of 1974, all property subject to
ad valorem taxation is to be taxed at a percentage of its fair market value. The Constitution
specifically provides that fair market value "shall be determined in accordance with criteria
which shall be established by law and which shall apply uniformly throughout the state."' Based
upon the mandate contained in the Constitution, the Legislature has defined fair market value as
follows:
Fair market value is the price for property which would be agreedupon between a willing and informed buyer and a willing andinformed seller under usual and ordinary circumstances; it shall bethe highest price estimated in terms of money which property willbring if it is exposed for sale on the open market with reasonabletime allowed to find a purchaser who is buying with knowledge ofall the uses and purposes to which the property is best adapted andfor which it can be legally used.
La. R.S. 47:2321 (Emphasis added). The Legislature understanding the role of the Louisiana
Tax Commission (the "Commission") in the determination of fair market value also established
the criteria for determining the fair market value of property in La. R.S. 47:2323. In that statute,
the Legislature provided:
A. The criteria for determining fair market value shall applyuniformly throughout the state. Uniform guidelines, proceduresand rules and regulations as are necessary to implement saidcriteria s/tall be adopted by the Louisiana Tax Commission onlyafter public hearings held pursuant to the AdministrativeProcedures Act.
B. Each assessor shall follow the uniform guidelines,procedures, and rules artd regulations in determining the fairmarket value of a[I property subject to taxntiort within hisrespective parish or district. Any manual or manuals used by an
1 See La. Const. Article VII, Section 18(D).
{N2855226.1}
Assessor shall be subject to approval by the Louisiana TaxCommission or its successor agency.
C. Criteria. The fair market value of real and personal propertyshall be determined by the following generally recognizedappraisal procedures: the market approach, the cost approach,and/or the income approach.
1) In utilizing the market approach, the assessor shall use anappraisal technique in which the market value is predicated uponprices paid in actual market transactions and current listings.
2) In utilizing the cost approach, the assessor shall use a methodin which the value of a property is derived by estimating thereplacement or reproduction costs of the improvements; deductingfrom the estimated depreciation; and then adding the market valueof the land, if any.
3) In utilizing the income approach, the assessor shall use anappraisal technique in which the anticipated net income isprocessed to indicate the capital amount of the investment whichproduces the net income.
La. R.S. 47:2323 (Emphasis added).
In its Rules and Regulations, the Commission states in Chapter 9 that "[t]he assessment
of an oil and gas property shall be made in accordance with the Louisiana Constitution of 1974,
Article VII, Section 18, and in accordance with guidelines adopted by the Tax Commission and
applied uniformly throughout the State." See Section 901(A). In Subsection B of Section 901,
the Commission specifically defines the "well" and its components and specifically provides that
"each well is a assessed in accordance with guidelines establishing "fair market value." In
Section 907, the Commission has promulgated Rules and Regulations regarding the proper
method of valuing oil, gas and other wells. The Rules and Regulations specifically direct that
{N2855226.1 }2
functional and/or economic obsolescence "shall" be considered in the analysis of the fair market
value of each oil, gas and other well. See Section 907(A).2
2 Louisiana courts have specifically acknowledged that assessors must follow the guidance of theCommission as set forth in its Rules and Regulations when determining fair market value. See,e.g. Warren Energy Resources, Inc. v. Louisiana Tax Commission, 2002-115 (La. App. 3 Cir.8/28/02), 825 So. 2d, 572, 575 ("Each assessor must follow uniform guidelines, procedures, andrules and regulations established by the Commission when determining the fair market value ofall property.") See also Dow Chemical Company v. Petry, 468 So. 2d 747 (La. App. 1 Cir. 1985)(affirming use of Commission's guideline tables in its Rules and Regulations for determining fairmarket value).
{N2855226.1 } 3
Exhibit B — Comparison of Texas &Louisiana
Comparison of Texas As
sess
ment
s to
Proposed LAA 2015 Ass
essm
ents
189682
Gas
-H
2002
9,i30
34,220
275%
67,135
635%
266,400
2818%
214,
807
2253%
268,
925
2846%
687,241
7427%
226405
Gas
-H
2007
6,94
020,501
195%
44,499
541%
239,600
3352h
138,020
1889Y
204,387
2845
1,69
1,52
124273%
230856
Gas
-H
2007
.:6,940
21,593
215%
47,520
585%
255,
868
3557%
142,
313
1951%
210,744
2937%
1,74
4,13
425032%
237439
Gas
-H
2008
B,440
20,750
199%
45,040
549%
242,514
3394%
140,
106
1919%
207,476
2840%
1,717,086
24642%
254406
Gas
24,022
H2009
36,354'
1,010,312
2679%
1,83
0,02
44933%
4,23
5,94
311550%
4,955,050
13528%
1,79
6,23
44840%
5,30
7,73
714498%
246181
Gas
30,003
H2009
30;47tR
140,172
360%
304,255
899%
1,63
8,24
15277%
894,814
2837%
938,602
2980%
7,767,954
25394%
256836
Gas
41,555
H2010
85,166
1,08
3,80
41173%
2,29
1,31
02591%
7,050,577
8179Y
4,491,738
5174%
2,24
4,08
02535%
4,45
4,46
95131%
254339
Gas
42,767
H2009
-212,$$0.
367,245
73%
927,584
336%
4,07
2,41
51813%
1,474,159
592%
1,26
1,36
1493%
7,32
1,02
33339%
258002
Gas
53,453
H2011
161,970
397,085
145%
1,00
2,95
4519%
4,40
3,31
72619%
1,53
7,77
4849%
1,31
5,79
3712%
7,63
6,94
74615%
260774
Gas
62,069
H2011
153,220.
380,099
148Y
960,049
527N
4,214,950
2651k
1,99
9,51
91205%
1,660,565
984%
9,638,025
6191%
257366
Gas
67,453
H2010
301,520
361,775
20%
913,767
203%
4,01
1,75
51231%
1,94
7,64
0546%
1,61
7,48
0436%
9,387,956
3014%
255889
Gas
71,323
H2009
194;750
336,029
73%
848,739
336
3,72
6,26
01813%
1,86
8,08
7859%
1,55
1,41
3697k
9,00
4,50
04524%
258149
Gas
82,450
H2011
327,750
390,751
19%
986,956
201%
4,333,078
1222%
2,03
1,40
5520k
1,687,045
415%
9,79
1,72
12888%
257367
Gas
88,426
H2011
378,280'
389,830
3%
984,629
160%
4,32
2,86
21043%
2,028,648
436%
1,684,755
345%
9,778,429
2485%
256920
Gas
93,332
H2010
320,160
380,428
19h
960,880
200%
4,21
8,59
61218%
2,004,681
526%
1,66
4,85
1420%
9,66
2,90
42915
258427
Gas
98,660
H2011
324;21p
398,122
23%
1,005,572
210/
4,414,810
1262%
2,05
3,46
7533%
1,705,367
426%
9,898,063
2953%
264002
Gas
101,674
H2012
258,100
634,006
146%
1,243,826
382%
4,93
5,67
71812%
2,50
9,24
2872%
2,159,721
737%
5,519,188
2035%
262604
Gas
104,429
H2011
399,210
627,215
57%
1,230,502
208%
4,85
2,80
71123%
2,48
7,06
2523%
2,14
0,63
0436%
5,470,401
1270%
263553
Gas
121,298
H2012
.403,210
614,517
52%
1,205,590
199%
4,78
3,95
41086Y
3,077,
492
663%
2,60
0,65
7545Y
6,64
6,00
41548%
256206
Gas
122,602
H2011
600,574
1,79
5,95
8199%
3,25
3,09
9442%
7,52
9,92
51154°
k14,593,585
2330k
3,570,924
495%
10,551,814
1657%
259378
Gas
124,
625
H2011
579,160
397,546
-31~
1,004,118
73~
4,40
8,42
5661%
2,56
4,67
9343%
2,091,194
261%
12,1
37,4
261996%
258553
Gas
135,904
H2010
692,610.
409,370
31%
1,03
3,98
149%
4,53
9,53
7555%
2,616,484
278%
2,133,434
208%
12,382,591
1688Y
260887
Gas
138,683
H2011
5$8,130
420,003
-29%
1,06
0,83
980%
4,65
7,45
2692%
2,645,704
350k
2,159,70
6267%
12,535,074
2031%
261149
Gas
140,
945
H2011
431,180'
428,871
-1%
1,083,237
151%
4,75
5,78
61003%
2,68
1,883
522%
2,15
6,75
9407%
12,692,094
2844%
263961
Gas
142,468
H2012
472,14Q.
670,338
42%
1,31
5,10
4179%
5,21
8,51
91005%
3,246,654
588%
2,743,608
481%
7,01
1,31
91385%
261946
Gas
177,
905
H2011
636,360
585,457
-8%
1,14
5,58
0SOY
4,557,730
616%
3,57
7,16
0462%
2,985,584
369%
7,62
9,69
01099Y
263086
Gas
195,923
H2011
717,930
428,295
-40%
1,08
1,78
351%
4,74
9,40
1562k
3,215,674
348%
2,58
9,63
3261%
15,0
30,3
971994%
263680
Gas
263,692
H2012
1,06
1,17
0432,099
-59%
1,09
1,39
13%
4,79
1,58
7352%
4,32
2,75
3307%
3,50
8,37
8231%
20,3
62,5
561819%
263055
Gas
264,560
H2012
1,16
3,39
0:634,407
-45%
1,244,612
7%
4,938,799
325%
5,020,429
332%
4,22
2,90
8263%
10,791,684
828%
262826
Gas
336,894
H2011
1,600,600
587,708
-63%
1,152,996
-28%
4,57
5,25
2186%
5,97
5,71
7273%
5,04
9,52
2215%
12,9
04,8
70706
263176
Gas
360,572
H2012
1,38
9,94
0434,598
-69%
1,09
7,70
4-21%
4,819,299
247%
5,42
1,95
0290%
4,42
0,96
2218%
25,6
59,5
481746%
266984
Gas
380,248
H2012
1,06
9,76
0.395,922
-63%
1,000,016
-7%
4,39
0,41
8310Y
5,13
5,51
7380%
4,187,410
291%
24,3
03,9
962172%
265978
Gas
385,206
H2012
1,43
2;53
0:444,773
-69%
1,123,4W
-22%
4,93
2,12
8244%
5,497,304
2S4%
4,48
2,40
4213%
26,0
16,1
621716%
270452
Gas
995,640
H2013
5,35
6,09
0:375,963
-93%
949,604
-82%
4,169,089
-22k
6,21
3,30
816%
7,50
5,51
340Y
43,562,485
713%
179347
Gas
-V
2000
8,400
49,978
495%
105,
661
1158%
325,130
3771%
153,953
1733%
SS5,
971
2114%
1,079,390
12750%
222552
Gas
4,749
V2006
10;700
460,056
4200%
972,622
8990%
2,992,848
27871%
677,880
6235%
818,861
7553%
4,752,720
44318h
225177
Gas
5,02
8V
2006
9,930
344,279
3367%
675,423
6702%
2,680,176
26891
479,528
4729
710,109
7051Y
5,87
6,92
559084Y
217952
Gas
13,5
48V
2005
51,680
485,495
494%
1,02
6,40
41157%
3,15
8,34
03767%
738,413
804%
891,983
992Y
5,177,128
6238Y
242487
Gas
22,358
V2008
33,090
516,746
1462%
1,09
2,47
33202%
3,361,641
10059%
733,170
2116%
855,650
2576k
5,140,368
15435%
190935
Gas
25,6
39V
2002
151;000
390,781
159%
826,165
447%
2,542,188
1584%
656,056
334%
792,498
425%
4,599,709
2946
242688
Gas
35,530
V2008
319;320
514,758
61~
1,08
8,33
3241
3,345,902
949%
1,25
2,09
9292
1,51
2,50
3374%
6,218,221
1847%
229670
Gas
49,437
V2007
50,040
608,182
1115%
1,193,162
2284%
4,73
4,63
69362%
855,312
1609%
1,26
6,59
02433Y
7,425,037
14738Y
217642
Gas
195,
711
V2005
1,513,900
832,277
-45%
1,75
9,54
916%
5,414,297
258%
4,340,058
187Y
3,14
5,60
6108%
12,171,534
704%
765
Oil
-V
1993
3;000
4,730
58%
12,7
97327%
57,704
1823%
27,421
814
25,963
765Y
281,423
9281%
12093
Oil
520
V1993
97,430
102,180
5%
171,998
77%
720,761
640%
214,
925
121%
272,730
180%
2,304,598
2265%
13102
Oil
900
V1993
171,990
30,492
-82%
82,494
-52%
371,977
116%
103,114
~0%
97,631
~3%
1,058,250
515%
13171
Oil
1,OS
6V
1993
?51,400
30,492
-88%
52,494
-67%
371,977
48°
k103,114
-59%
97,631
-61%
1,058,250
321°
/a
13145
Oil
1,108
V1993
216,410
30,027
-86%
81,2
36-62%
366,305
69%
101,
541
-53%
96,143
-56%
1,04
2,11
1382%
13049
Oil
1,35
1V
1993
180,430
30,492
-S3%
82,494
-54%
371,977
106Y
103,114
~3Y
97,631
-46Y
1,058,250
487%
12888
Oil
1,87
0V
1993
441,900
20,910
-95%
48,692
-89%
602,701
36%
88,8
71-80%
120,928
-73k
524,868
19 °
h
13025
Oil
3,94
9V
1993
913,700
49,609
-95%
134,213
-85%
605,183
-34%
309,157
-66%
217,538
-76%
1,62
3,32
178Y
13068
Oil
5,05
2V
1993
1,457,570
50,820
-97%
137,
491
-91%
619,962
-57%
316,707
-78%
223,158
-85%
1,66
2,96
414%
12941
Oil
5,336
V1993
1,421,490
50,820
-96%
137,
491
-90%
619,962
-56~
316,707
-78%
223,158
-84%
1,66
2,96
417%
12923
Oil
5,515
V1993
1,466,900
50,776
-97k
137,370
-91%
619,419
-58%
316,429
-78%
222,962
-85%
1,661,506
13%
761
Oil
7,46
9V
1993
961,470
46,322
-95%
125,320
-87%
565,084
-41%
409,512
-57%
254,255
-74%
1,86
0,25
193Y
12912
Oil
12,8
10V
1993
3,30
7,90
0.64
,351
-98%
174,098
-95%
785,032
-76%
932,633
-72%
565,150
-83%
4,11
5,76
524%
3a,9~8,420
20,!314,667.
` ~'
' 8 -
:._
'...
" ` .
..:I
121.957535
9~,~3;275
449,D52856.
s~
1993 is the ol
dest
day pro
duct
ion available on RRC website
"• Dai
ly pro
duct
ion
is the
annual pr
ojec
ted rate div
ided
by 365.
""" Assumed lateral length
is 5,0
00'
Exhibit C — Comparison of Current to ProposedLTC Assessments
Comparison of
Current LTC Assessments to LAA Proposal
Propose)
Parish
Region
Oil /Gas
Age
ND
Tota
l De
pth
H/V
curr
ent LTC
Curr
ent LTC
Prop
osed
LAA
Prop
osed
lAA
Parishwide
Taxes at Cur
rent
Taxes at LAA
Increase
Valu
eAs
esse
d Va
lue
Valu
eAs
sess
ed Val
ueMillage
lTC
Prop
osed
2014 to
2015
Acad
ia2
Gas
29
9,274
9,45
0V
188,
255
28,2
3826
1,45
339,218
74A
$
2,089.63
$
2,902.13
39%
Acad
ia2
Oil
44,
875
5,220
V36
9,82
055,473
3,28
7,26
719
3,09
074.0 S
4,105.01 $
14,288.66
248%
Allen
2Gas
57
9,246
9,500
V187,686
28,153
160,
664
39,100
156.2
$
4,39
7.49
$
6,10736
39%
Allen
2Gas
29
9,528
9,626
V19
3,41
329
,012
268,614
40,292
156.2 $
4,531.61 $
6,293.63
39%
Alle
n2
Gas
32
9,500
9,600
V19
2,84
228,926
267,
825
40,174
156.
2
$
4,518.30
$
6,27
5.13
39%
Bien
vill
e1
Gas
57
7,57
27,
643
V78,361
31,7
54144,154
21,623
IQ5.5 $
1,24
0.06
$
2,28
1.24
84%
Bien
vill
e1
Gas
19
9,148
9,300
V104,138
15,6
2117
4,15
726,124
105.5 $
1,64
7.98
$
2,75
6.04
67%
Bossier
1Gas
38,
785
13,387
H68
1,&5
7102,278
6,363,102
954,
465
102.1 5
10,442.63 $
97,450.91
833%
Bossier
1Gas
411,312
36,1
68H
1,01
7,68
015
2,65
217
,750
,538
2,662,581
102.1 $
15,585.76 $
277,849.49
1644%
Bossier
1Gas
41
7,86
99,000
V81,435
12,2
15256,814
38,522
102.1
$
1,24
7.17
$
3,93
3.11
215%
Bossier
1Gas
18
2,40
82,
600
V31,573
4,736
74,886
11,233
102.
1 $
483.53 $
1,14
6.88
337%
Gddo
1Gas
311,158
15,903
H1,
050,
515
157,
577
17,8
84,5
012,682,675
137.7
$
21,6
98.3
8
$
369,404.38
1602%
Caddo
1Gas
511,089
16,0
35H
951,
217
142,682
17,1
37,3
432,570,571
137.7
$
19,6
47.3
8
$
353,967.69
1702%
Caddo
1Gas
l5
1,700
4,614
V31,406
4,711
45,849
6,877
137.7 $
648.74 $
947.00
46%
Caddo
1Oi
l31
3,675
3,775
V12,079
1,811
70,865
30,630
137.7
$
249.
49
$
1,463.72
487%
Caddo
1Oi
l59
1,485
2,212
V6,
210
932
17,363
2,60
4137.7
$
12817 5
358.62
180%
Caddo
1Oi
l66
1,517
1,517
V6,344
952
17,737
2,66
1137.7
$
131.04
$
366.35
180%
Calcasieu
2Oi
l6
6,770
9,858
V38
1,78
757,268
564,
721
84,708
109.
3
$
6,25
9.40
$
9,258.60
48%
Cameron
2Gas
413,142
13,818
V3,233,763
4&5,
064
3,053,844
458,077
131.
0 $
63,5
43.4
3 $
60,0
08.0
3-G%
Cameron
2Gas
48
12,800
15,622
V73
2,46
7109,870
987,
070
148,061
131.0 $
14,392.96 $
19,3
95.9
335%
Cameron
2Oi
l27
7,71
58,700
V253,654
38,048
551,599
ffi,740
131.0
$
4,984.30
$
10,838.92
117%
Claiborne
1Gas
17
8,851
9,300
V123,656
18,548
216,246
32,4
3775
.3 $
1,396.70 $
2,44
2.50
75%
Clai
born
e1
Gas
16
8,830
9,095
V109,656
16,448
178,
750
26,8
1275
.3 $
1,23
8.56
$
2,018.98
63%
Clai
born
e1
Gas
30
8,53
29,600
V88,2%
13,244
162,
430
24,3
6575
.3 S
997.30 S
1,634.65
84%
Clai
born
e1
Gas
17
7,05
59,450
V73,323
10,969
190,
649
28,597
75.3
$
825.93 S
2,753.39
161%
Clai
born
e1
Gas
31
6,984
7,694
V53
,620
8,043
147,
063
22,059
75.3
$
605.64 S
1,66
1.08
174%
Clai
born
eI
Gas
37
9,32
012,010
V96,451
14,468
177,
432
26,6
15753 $
1,08
9.41
$
2,000.09
84%
Claiborne
1Gas
13
8,45
89,
700
V196,943
29,5
41313,116
48,467
75.3
$
2.22
4.47
$
3,649.60
64%
Dewto
1Gas
18
2,870
2,92
5V
27,186
4,078
44,769
6,735
112.8 $
459.98 $
757.49
65%
Deso
to1
Gas
30
2,87
53,005
V22
,694
3,40
442,176
6,32
6112.8 $
383.98 $
713.
6186%
Deso
to1
Gas
32
6,116
7,574
V46,956
7,04
312
8,78
519,316
112.8 $
794.50 $
2,179.05
174%
EBR
2Gas
819,218
20,950
V7,299,650
1,094,947
12,3
75,2
781,856,292
113.1 $
123,
838.
56 $
209,
946.
607036
Evan
geli
ne2
Gas
38
11,108
14,072
V49
1,32
973,699
749,
262
332,
389
73.6 $
5,42
4.27
$
8,271.85
SZ%
Iber
ia2
Oil
20
11,705
12,7
41V
551,
021
82,653
3,207,509
481,126
69.7
$
5,76
0.93
$
33,534.51
482%
Wfourche
2Oi
l14
13,167
13,800
V1$48,755
232,
313
7,29
2,03
81,093,806
325.
5
$
29,1
55.3
2 $
137,
272.
61371%
Linc
oln
1Gas
17
9,059
9,23
2V
126,562
18,984
383,386
27,508
86.4 $
1,640.25 $
2,376.68
45%
Linc
oln
1Gas
62
9,137
9,196
V94,557
14,184
298,
197
04,729
86.4 5
1,22
5.46
$
3,86
4.63
2]5%
Natchitoches
1Oi
l54
1,36M1
1,227
V5,
392
809
17,356
2,604
90.3
$
73.0
3 $
235.12
222%
Natchitoches
1Oi
l55
1,21
71,
293
V5,
637
846
18,149
2,72
390
.3 $
76.36 $
245.82
222%
Natchitoches
1Oi
l57
1,185
1,305
V5,489
823
17,6
712,
651
90.3
$
74.3
5 $
239.36
222%
Plaquemines
2Gas
S795
1,03
0V
74,662
11,202
84,556
12,683
62.5 $
700.15 $
792.
7113%
Plaquemines
2Gas
812,066
12,4
35V
1,867,962
280,194
5,391,966
808,
795
62.5
$
17,5
12.1
4
$
50,549.68
189%
Plaquemines
2Oi
l10
10,272
30,502
V1,381,605
207,241
2,728,505
409,276
62.5 $
11,9
52.5
4 $
25,579.73
97%
Pointe Coupee
2Gas
14
18,266
19,193
V3,964,599
594,690
6,557,267
983,
590
55.0
$
32,707.94
$
54,0
97.4
565%
Poin
te Coupee
2Gas
12
18,977
21,032
V5,146,650
772,
297
7,95
6,12
31,
193,
418
55.0 $
42,47636 $
65,638.01
5576
Poin
te Coupee
ZGas
819,260
22,553
V7,
335,
603
1,09
7,34
09,921,859
1,48
8,27
955.0 $
60,3
53.7
2 $
81,555.34
36%
Red Riv
er1
Gas
23
3,011
3,&50
V23,768
3,565
44,371
6,62
693.7
$
334.
05
$
620.82
86%
Red Riv
er1
Gas
Z6
2,79
67,
485
V22,071
3,311
41,017
6,15
293.7
$
310.20
$
576.49
86%
St James
2Oi
l38
30,8
2611,735
V291,224
43,684
415,
329
62,299
107.6
$
4,700.35
$
6,70
3.42
43%
St Landry
2Gas
51
10,444
10,703
V27
7,17
541,576
308,
207
46,2
3159
.5
$
2,473.79
$
2,75
0.75
11%
7errebonne
2Gas
30
14,166
15,200
V486,381
72,957
477,
929
71,689
97.5 5
7,133.32
$
6,98
9.71
-2%
Terrebonne
2Gas
713,570
13,849
V2,
873,
160
430,
974
2,877,735
431,
660
97.5
$
4Z,0
19.9
6 $
42,0
86.8
70%
Terrebonne
2Gas
313,160
13,3
75V
3,388,805
508,
321
9,78
8,89
91,468,335
97.5
$
49,561.28
$
143,
161.
64189%
Terrebonne
2Oi
l27
7,126
7,92
5V
103,071
15,4
6120
9,11
531
,367
97.5
$
1,50
7.41
$
3,0.58.31
103%
Terrebonne
2Oi
l27
6,042
6,308
V14
5,61
221,842
590,850
88,627
97.5
$
2,129.58 $
8,641.18
306%
Unio
n1
Gas
19
8,311
8,500
V94,610
14,1
9115
8,22
323,733
71.8
$
1,018.95
$
1,70
4.06
67%
WBft
2Gas
820
,235
22,2
89V
11,5
38,%8
1,730,845
22,910,213
3,436,532
84.5
$
146,256.42
$
290,
386.
9599%
WBR
2Oi
l29
10,356
13,900
V27
8,58
343,787
397,298
59,595
84.5
$
3,53
1.01
$
5,035.75
43%
WBR
2Oi
l29
10,368
15,763
V27
8,90
341,836
681,872
102,281
84.5
$
3,535.10
$
8.64
2.73
144%
Webster
1Gas
33
11,0
4511,500
V13
8,65
020,798
269,
826
40,474
103.
3 $
2,148.38 $
4,18
0.96
95%
Webster
1Gas
51
6,34
96,
950
V48,7
457,
312
229,186
30,378
1033
$
75531
$
3,55
1.23
370%
Webster
1Gas
34
11,300
11,500
V23
6,41
935,463
847,886
127,
183
103.
3
$
3,663.31
$
13,1
37.9
9259%
$
797,018.87 $
2.47
6.43
811
Exhibit D -Louisiana Parishwide Millages
Louisiana Parishwide MillagesTax Year 2013 (Orleans 2014)
Rank PARISH
1 GRANT 172.62 LASALLE 160.93 ALLEN 156.24 ST. TAMMANY 150.05 ORLEANS 148.86 CALDWELL 146.37 CADDO 137.78 ST. BERNARD 135.19 ST. HELENA 131.910 CAMERON 131.011 EAST CARROLL 130.612 LAFOURCHE 125.513 VERNON 123.014 ST. JOHN 117.615 RAPIDES 116.516 WASHINGTON 116.017 BEAUREGARD 114.418 ST. CHARLES 113.419 EAST BATON ROUGE 113.120 DESOTO 112.821 LIVINGSTON 111.722 CALCASIEU 109.323 ASCENSION 108.924 ST. JAMES 107.625 MADISON 106.526 BIENVILLE 105.527 WINN 105.028 JEFFERSON DAVIS 104.529 CONCORDIA 104.530 IBERVILLE 104.031 WEBSTER 103.332 TENSAS 102.933 JEFFERSON 102.634 BOSSIER 102.135 ST. MARTIN 101.336 ASSUMPTION 101.137 JACKSON 100.138 TERREBONNE 97.539 VERMILION 96.740 ST. MARY 96.6
Louisiana Parishwide MillagesTax Year 2013 (Orleans 2014)
Rank PARISH
41 CATAHOULA 94.542 OUACHITA 94.343 RED RIVER 93.744 FRANKLIN 92.245 MOREHOUSE 91.446 NATCHITOCHES 90.347 SABINE 87.748 LINCOLN 86.449 WEST BATON ROUGE 84.550 LAFAYETTE 82.951 WEST FELICIANA 79.652 TANGIPAHOA 78.753 CLAIBORNE 75.354 ACADIA 74.055 EVANGELINE 73.656 UNION 71.857 AVOYELLES 70.258 IBERIA 69.759 RICHLAND 69.260 WEST CARROLL 69.061 PLAQUEMINES 62.562 ST. LANDRY 59.563 PT. COUPEE 55.064 EAST FELICIANA 50.2
Statewide Weighted Average 107.8Statewide Simple Average 102.8
Exhibit E1 — Impact on Haynesville Well 1
Impact of LAA on a Hay
nesv
ille
Well
2015 Rules Proposed by
LAA
This
spreadshe
et shows the impact of the 2015 LAA pro
posa
l on a Haynesville well. Based on the age of the well, you can tell the impact exp
ecte
d.
~00~ Gross
Taxes as % of
WI Gross
Taxes as
Tota
l Vertical
Production
Assessment
Obsolescence
Assessed Wel
lEstimated
Estimated Tax
Tota
l Estimated
Age
Tota
l Depth
Depreciation
Income @ $4
100 % Gross
Income @ $4
of WI Gross
Depth
Per Day (mcn
Rate (E per ft
)(off good)
Value
Surface EQ
Rate (mils)
Taxes
Gas
Income
Gas
Income
1 15,857
11,710
12,361
182.17
0.984
1.00
2,842,451
355,306
0.120
$383
,730
.88
$18,
047,
060
2.13%
$13,
535,
295
2.84%
2
15,857
11,710
5,274
182.17
0.96
61.
002,
790,
455
348,807
0.120
$376,711.41
$7,700,040
4.89%
$5,775,030
6.52%
3
15,857
11,710
1,328
182.17
0.947
1.00
2,735,570
341,946
0.120
$369
,301
.98
$1,938,880
19.05°~
$1,454,160
25.40%
4
15,857
11,710
681
182.17
0.926
0.64
1,71
1,94
1213,993
0.120
$231
,112
.06
$994,260
23.24%
$745,695
30.99%
5
15,857
11,710
558
182.17
0.904
0.48
1,25
3,45
2156,681
0.120
$169
,215
.96
$814,680
20.77%
$611,010
27.69%
6
15,857
11,710
463
182.17
0.880
0.48
1,220,174
152,522
0.120
$164,723.50
$675,980
24.37%
$506,985
32.49%
7
15,857
11,710
395
182.17
0.853
0.40
985,614
123,202
0.120
$133
,057
.90
$576,700
23.07%
$432,525
30.76°h
8
15,857
11,710
344
182.17
0.825
0.40
953,
261
119,158
0.120
$128,69023
$502,240
25.62%
$376,680
34.16%
9
15,857
11,710
305
182.17
0.795
0.40
918,597
114,825
0.120
$124
,010
.59
$445,300
27.85%
$333,975
37.13%
10
15,857
11,710
274
182.17
0.762
0.32
704,373
88,047
0.120
$95,
090.
38$400,040
23.77%
$300,030
31.69%
11
15,857
11,710
248
182.17
0.727
0.32
672,020
84,003
0.120
$90,722.72
$362,080
25.06%
$271,560
33.41%
12
15,857
11,710
227
182.17
0.688
0.32
635,970
79,496
0.120
$85,855.89
$331,420
25.91%
$248,565
34.54%
13
15,857
11,710
209
182.17
0.647
0.32
598,070
74,759
0.120
$80,
739.
475305,140
26.46%
$228,855
35.28%
14
15,857
11,710
194
182.17
0.602
0.32
556,473
69,559
0.120
$75,123.90
$283,240
26.52%
$212,430
35.36%
15
15,857
11,710
181
182.17
0.554
0.32
512,103
64,013
0.120
$69,
133.
95$264,260
26.16%
$198,195
34.88%
16
15,857
11,710
170
182.17
0.502
0.32
464,036
58,004
0.120
$62,
644.
85$248,200
2524%
$186,150
33.65%
17
15,857
11,710
159
162.17
0.446
0.32
412,
271
51,534
0.120
$55,
656.
58$232,140
23.98%
$174,105
31.97%
18
15,857
11,710
151
182.17
0.385
0.32
355,884
44,486
0.120
$48,
044.
35$220,460
21.79%
$165,345
29.06%
19
15,857
11,710
143
182.17
0.319
024
221,157
27,645
0.120
$29,
856.
13$208,780
14.30%
$156,585
19.07%
20
15,857
11,710
135
182.17
0.300
0.24
207,984
25,998
0.120
$28,077.87
$197,100
14.25%
$147,825
18.99%
21
15,857
11,710
129
182.17
0.300
D.24
207,984
25,998
0.120
$28,
077.
87$188,340
14.91%
$141,255
19.88%
22
15,857
11,710
122
182.77
0.300
0.24
207,984
25,998
0.120
$28,
077.
87$178,120
15.76%
$133,590
21.02%
23
15,857
11,710
116
782.
170.300
024
207,984
25,998
0.120
$28,
077.
87$169,360
16.58%
$127,020
22.11
24
15,857
11,7
1D110
182.17
0.300
0.24
207,984
25,998
0.120
$28,
077.
87$160,600
17.48%
$120,450
23.31
25
15,857
11,710
105
182.17
0.300
0.24
207,984
25,998
0.120
$28,
077.
87$153,300
18.32%
$114,975
24.42%
Equipment Val
ue is 12.5 k of the we
ll val
ue for thi
s ex
ampl
e.
This
wel
l was com
plet
ed in 2009. The highlighted row emphasizes tha
t ye
ar.
WI is assumed to be .750000
Prod
ucti
on after 2013 is pr
ojec
ted.
A rate of 120 mils was use
d, whi
ch is within a reasonable range of the Haynesville pa
rish
es with the hi
ghes
t we
ll pop
ulat
ion.
Wells
Well Infc~rm~~ic~nReview Well Information
WELLS
SERIAL WELL NAME WELL NUM ORG ID FIELD PARISH PROD TYPE SEC TWN RGE EFFECTIVE DATE API NUM
240013 HA RA SU64;GARLAND 25H~001 G104 1464 16 20 025 14N 16W 11/10/2009 17031248420000
PRMT DATE SPUD DATE STAT DATE ST CD
07/20/2009 08/24/2009 11/10/2009 10
WELL SURFACE COORDINATES
Surface Lon itude Surface Latitude Lambert X Lambert Y Ground Elevation Zone Datum
0-0-0 0-0-0 1549418 553605 290 N~ NAD-27
WELL SURFACE COORDINATES GENERATED BY DNR
UTMX 83 UTMY 83 LOh1GITUDE 83 LATITUDE 83
409821.6360746 3560838.12984851 -93.95657838 32.18044715
BOTTOM HOLE COORD
Page 1 of 3
EFDATEVE END DATEP TOTAL KDEPTH
V R71CALDEPTH
MDEPTH D EG MIN SEC DEG `M NG L ECG CO50 RCETE LAMXERT LAMYERT ZONE COOP D E(ATE
11/10/2009 16291 11626 16291 ~~~~~~02 2830101 609473002
09/30/2009 11/09/2009 11626 16291 ~
11683 16406 0~~00~
09/29/2009 11683 16406 00
0~00~0~00 U2 2830101 609473 N~02
07/20/2009 02 1549315 548764 ~C1
07/20/2009 0~~~0~0~ U2, 2830101 609473 N~02WELL HISTORY
SERIAL WELL NAME WELL NUM ORG ID FIELD ST CD PT WELL CLASS Ef F DATE END DATE STAT DATE
240013 HA RA SU64;GARLAND 25H 001 G104 1464 10 20 11/10/2009 11/10/2009
240013 HA RA SU64;GARLAND 25H 001 G104 1464 01 00 07/20/2009 11/09/2009 07/20/2009SCOUT INFO
RDA~TET STATUS MDEPTHED TRDEPTHRT DETAIL
03/11/2010 ~ 1I 0 1
u16291
110,710- SE85TMD~09; 5
SET 5 1 /2 TO 16,291' Wi
TD 10-3-09 _
DRILLING
SET 7 5/8 TO 11,150' Wi
SET 10 3/4 TO 1925' W/
SPUD 8-24-09; DRILLING
215' FNL & 1649' FEL OF
LpWER PERF SANDS RESERVOIR
10/29/2009 _ 09 16291
tOR3/2009 09 16291
10/02/2009_
09/25/2009
09/04/2009-
05 15441
OS 11989
05 x5176 ~
08/28/2009 OS 750
07/20/2009 01 16406
PERFORATIONSSERIAL NUM COMPLETION DATE UPPER PERF
240013 11/10/2009 ~ 11710 15857 HA r~~WELL TESTS
DRILLING
16,145'
24/64 CHOKE; 7500# CP; PERFS
SEC 25.
TYPTEST DATE RPT DATE OOIT CONQ
DEL WATER BSW°lu
PRE`S SPRESN CHOKE
pERF`PERFR BOP SOLE
DT-1 03/28/2014 05/01/2014 ~1293 ~
755
858 14
2701 13
2326 60
1846 ~
2217 11
3624 11
18750 450
18826 475
1200 4200 10 14349 16145
16145
16145
16145
16145
16145
16145
16145
16145
15857
DT-1 10/08/2013 11/01/2013
04/03/2013 05/01/2013
550 2250 17 14349DT-1 500 4400 14 14349DT-1 _ 10/06/2012 11/01/2012 0 3000 4400 14 14349DT-1 101/04/2012 05/01/2012 1600
7500
7500
7500
7500
14 14349DT-1 10/11/2011 11/01/2011 0 24 ,14349DT-1 03/31/2011 05/01/2011
10/06/2010 11/01/2010
03/10/2010 05/01/2010
12/16/2009 12/16/2009
24 14349DT-1 24 14349DT-1 24 14349SDM2G 24 11710WELL ALLOWABLES
EFFECTIVE DATE END DATE LUW CODE LUW TYPE CODE ALLOWABLE ESTIMATED POTENTIAL CURRENT ALLOWABLE TYPE07/01/2014 12/31/2014 615874~1293 1293 301/01/2014 06/30/2014 615874~755 755 ~~—~~07/01/2013 12/31/2013 615874~858 858 ~301/01/2013 06/30/2013 615874~2701 2701 ~307/01/2012 12/37/2012 615874~2326 2326 —~301/01/2012 06/30/2012 615874 ~~1846 1846 ~307/01/2011 12/31/2011 61587402217 217 ~301/01/2011 06/30/2011 615874 ~~3624 3624 ~307/01/2010 12/31/2010 615874 ~~18750 18750 ~303/16/2010 06/30/2010 615874 ~~18826 18826 ~~~3LEASE~UNITWELL PRODUCTIONRPT DATE LUW CODE S70RAGE FAC pOC USE WELL CNT OPENING STK OIL PROD(BBL) GAS PRQD(MCF) DISPOSITION CLOSING STK PARISH~-i~ r ~~ -.r ter- -~~ ~r ~
http://sonlite.dnr.state.la.us/sundown/cart~rod/cart_con wellinfo2 7/22/2014
Wells
CASING
Page 2 of 3
~1 (~6 ~~0 ~~15653 ~~~~~DESOTO
10~_~~0 ~ 29047 ~~~60DE 50T0
10~0039692 ~6~DE SOTO10 600010 00~DE SOTO
10~000000~DE SOTO
000 0 0~DE SOTO
~~~950 0~DE SOTO
10C~~17969 006~DE SOTO
~~~[0~21708 ~~60DE 5070
60f0~27831 ~60DE SOTO1060~24624 0~6~DE SOTO60~17834 ~~~~DE SOTO
600027614 ~~~DE SOTO
~~~22599 ~~DE SOTO1060C~28887 ~~DE SOTO
10~~26878 ~60DE SOTO
O0~31829 ~~~DE SOTO10600 34937 00~DESOTO
0~~4033.1 ~~DE 5070
~~~~~60062 ~~~DE SOTO
~~~ 60 C~~DE SOTOf, ~~6 -~IO ~~37547 _~~~~DE SOTO
—~0027342 —~006~DE SOTO
0~~0033727 ~~6~DE SOTO
10~0045898 ~~DE SOTO
10~~44826 ~~~DE SOTO
10~~~47259 ~~~~DE SOTO
[~~~~51081 ~~~~DE SOTO
~~~—~61698 ~60DE SOTO
~~0 51&47 00~DE SOTO
~~0047377 ~6~DE SOTO
~~~55974 0060DE SOTO
~~~~44768 ~~DE SOTO
10~~~58904 C~~DE SOTO
10~C—~67962 ~~6~DE 5070
10~~ ~r55904 ~~6 ~DE SOTO
0~060795 00DE SOTO
60~~66245 ~6~DE SOTO
0~~70197 ~~DE SOTO
~~~70524 ~~~DE SOTO
10~~~83667 ~~DE SOTO
OC~~ 7325 ~ 0 6 DE SOTO
10~~~102682 00~DE SOTO
1060~103518 ~6~DE SOTO
00~113773 ~~DE SOTO
~~60127086 ~~~~DE SOTO
~~~144744 C~C_~DE SOTO
0~~~135112 ~~~DESOTO',
~~~~167046 ~~O~DESOTO
10~~0183234 O~~LDESOTO
00~_~218237 ~~0~DE SOTO.
~~~232381 ~~JDE SOTOJ
0~0
_
300039 ~~~DE SOTO
10~~~~383217~~~DE SOTO
10~~u~310707 0~00DE SOTO
COMDATE'ONCSIZEG w~5 ZE RE WEIGHT uSET R
DEPTHSET EPTH S CKS PRESSURE H PRES
URE~R TEST DATEBULLED PROCESS
09/30/2009 0512 0634 23 ~16291 784 165010/03/2009HISTORY
09/30/2009 1034 1312 45.5 ~1923 964 150008/25/2009HISTORY
09/30/2009 0758 1100 26 ~~10564 1761 3000~~07/27/2009HISTORY._______
PLUG AND ABANDON
P and A DATE LOCdTION TYPE CASING CUT TYPE CASING CUT DEPTH MUD WEIGHT LEFT COMMENTSPLUGS
PLUG TYPE UPPER PLUG DEPTH LOWER PLUG DEPTH SACKS OF CEMENT SLURRY WEIGHTTUBING AND PACKERS
http://sonlite.dnr.state.la.us/sundown/cart~rodlcart_con wellinfo2 7/22/2014
Wells Page 3 of 3
COMPLETION DATE ~ TUBING SIZE TUBING LOWER DEPTH TUBING UPPER. DEPTH ~ PACKER DEPTH
11/10/2009___ 02&03/08 11369 ~~ _ ~ 11359
WORK PERMITS
RNUMBERE APPDATEION
EXDATE'ON ER ET EAMIS STOAT USEDATIE DEPTH WORK_PERFORMED
ORECEIPTOATE~ SAND DESCRIPTION
http://sonlite.dnr.state.la.us/sundown/cart~rod/cart_con_wellinfo2 7/22/2014
Exhibit E2 — Impact on Haynesville Well 2
Impa
ct of LAA on a Haynesville Wel
l2015 Rul
es Proposed by LAA
This
spreads
heet
sho
ws the
impact of
the
2015 LAA proposal on a Haynesville well. B
ased on th
e age of
the
well, you
can te
ll the
impact expected.
~OOk Gro
ssTaxes as
k of
WI Gro
ssTaxes as
k
Age
Total Depth
Total Ve
rtic
alProduction
Assessment
Depreciation
Obso
lesc
ence
Asse
ssed
Well
Esti
mate
dEstimated Ta
xTotal Estimated
income @ 54
100k Gross
Income @ $4
of WI Gross
Depth
Per Day (mcf)
Rate (S pe
r ft)
(~ good)
Value
Surface EQ
Rate (mils)
Takes
Gas
Income
Gas
Income
1 16,701
12,580
5,03
8182.17
0.984
1.00
2,993,742
374,218
0.120
$404,15523
$7,3
55,4
805.49
°k$5
,516
,610
7.33%
2
16,701
12,580
909
182.17
0.96
60.80
2,351,183
293,898
0.120
$317
,409
.72
$1,3
27,1
4023.92k
$995,355
31.89%
3
16,701
12,580
282
182.17
D.947
0.32
921,975
115,
247
0.120
$124,466.67
$411,720
3023%
$308,790
40.31
4
16,701
12,580
145
182.17
0.926
024
676,148
84,518
0.120
$91,
279.
94$211,700
43.12
$158,775
57.49h
5
16,701
12,580
185
182.17
0.904
0.32
880,112
110,014
0.120
$118,815.07
$270,100
43.99%
$202,575
58.65h
6
16,701
12,580
153
182.17
0.880
0.32
856,746
107,093
0.120
$115
,660
.68
$223,279
51.80h
$167,459
69.07%
7
16,701
12,580
130
182.17
0.853
024
622,844
77,856
0.120
$84,
084.
00$190,316
44.18%
$142,737
58.91%
8
16,701
12,580
114
182.17
0.825
024
602,399
75,300
0.120
$81,323.92
$165,844
49.04%
$124,383
65.38%
9
16,701
12,580
101
182.17
0.795
0.24
580,494
72,562
0.120
$78,
366.68
$146,955
53.33%
$110,216
71.10%
10
16,701
12,580
90
182.17
0.762
0.24
556,398
69,550
0.120
$75,113.73
$131,932
56.93%
$98,949
75.91
11
16,701
12,580
82
182.17
0.727
024
530,842
66,355
0.120
$71,663.62
$119,697
59.87%
$89,772
79.83%
12
16,701
12,580
75
182.17
0.688
024
502,365
62,796
0.120
$67,819.22
$109,539
61.91%
$82,154
82.55%
13
16,701
12,580
69
182.17
0.647
0.14
275,583
34,448
0.120
$37,
203.
64$100,972
36.85°k
$75,729
49.13%
14
16,701
12,580
64
182.17
0.602
0.14
256,415
32,052
0.120
$34,616.06
$93,648
36.96%
$70,236
4929%
15
16,701
12,580
60
182.17
0.554
0.14
235,970
29,496
0.120
$31,
855.98
587,315
36.48%
$65,486
48.65%
16
16,701
12,580
56
182.17
0.502
0.14
213,821
26,728
0.120
$28,865.88
$81,784
35.30%
$61,338
47.06%
17
16,701
12,580
53
182.17
0.44
60.14
189,969
23,746
0.120
$25,
645.
79$76,912
33.34%
$57,684
44.46%
18
16,701
12,580
50
182.17
0.385
0.14
163,987
20,498
0.120
$22,
138.18
$72,588
30.50%
$54,441
40.66%
19
16,701
12,580
47
182.17
0.319
0.14
135,875
16,9
840.120
$18,343.06
$68,725
26.69%
$51,544
35.59%
20
16,701
12,580
45
182.17
0.300
0.14
127,782
15,973
0.120
$17,
250.
53$65,238
26.44%
$48,929
35.26%
21
16,701
12,580
42
182.17
0.3D0
0.14
127,782
15,973
0.120
$17,
250.
53$61,976
27.83%
$46,482
37.11%
22
16,701
12,580
40
182.17
0.300
0.14
127,782
15,973
0.120
$17,250.53
$58,877
29.30°6
$44,158
39.07%
23
16,701
12,580
38
182.17
0.300
0.14
127,782
15,973
0.120
$17,250.53
$55,934
30.84%
$41,950
41.12°k
24
16,701
12,580
36
182.17
0.300
0.14
127,782
15,973
0.120
$17,250.53
$53,136
32.46%
$39,852
4329%
25
16,701
12,580
35
182.17
0.300
0.14
127,782
15,973
0.120
$17,
250.
53$50,480
34.17%
$37,860
45.56%
Equipment Val
ue is 12.5 % of the well val
ue for thi
s example.
This
wel
l was completed in 2010. The highlighted row emphasizes that ye
ar.
WI is assumed to be .750000
Prod
ucti
on after 2013 is pr
ojec
ted.
A rate of 120 mils was use
d, whi
ch is wi
thin
a reasonable range of the Haynesville par
ishe
s wi
th the hig
hest
well po
pula
tion
.
Wells
Well InformationReview Well Information
Page 1 of 3
WELLS
SERIAL ~ _ WELL NAME ~ WELL NUM ORG ID FIELD PARISH PROD TYPE SEC TWN RGE EFFECTIVE DATE API NUM
240372 HA RA SUSS;SUSTAINABLE fOR 3HZ 001 C332 2872 43 20 010 08N 13W [04/13/2010 ~ 17085221430000
PRMT DATE SPUD DATE STAT DATE ST CD
10/23/2009 11/21/2009 03/16/2010 10
WELL SURFACE COORDINATES
Surface Lon itude Surface Latitude Lambert X Lambert Y Ground Elevation Zone Datum
93-41-12.5 31-41-59.8 1630906 377871 288 NO NAD-27
WELL SURFACE COORDINATES GENERATED BY DNR
UTMX 83 UTMY 83 LONGITUDE 83 LATITUDE 83
434899.2195986 3507401.58802204 -93.68698881 31.70011507
BOTTOM HOLE COORD
EF DATE~E END DATEP
DEP HL KvDEPTHL M DEPTH D DEG MIN SEC LDEG
LSO NG LONG COOQURCETE LAMXER7 LAMBER~ ZONE COO $D EN~ATE
01/16/2010 03/15/2010 12250 16838 31
03/16/2010 12250 16838 31
10/23/2009 01/15/2010 12600 17600 31
42 48.58 93 41 15.94 02 ,_1630663 ,~8280d~ ND 01
41 15.94 02 1b30663 38Z~04_~ N~ 01
41 15.94 02 ~ 1630663 j382804~ N~] pt__
42 48.58 93
42 48.58 93
WELL HISTORY
SERIAL WELL NAME
240372 HA RA SUSS;SUSTAINABLE FC
240372 SUSTAINABLE FORESTS 3 HZ
240372 SUSTAINABLE FORESTS 3 HZ
SCOUT INFO
WELL NUM ORG ID FIELD ST CD PT WELL CLASS EFF DATE END DATE STAT DATE
iR 3HZ 001 C332 2872 10 20 04/13/2010 03/16/2010
001 C332 2872 10 20 03/16/2010 04/12/2010 03/16/2010
001 C332 2672 01 0 10/23/2009 03/15/2010 10/23/2009
TRUE VERT pETAiLDEPTH
COMPLETED 3.16-10; GAS; NON-UNIT HAYNESVILLE;PERFS 12,580.16.701' MD
KE; 7246# CP;
WAITING ON POTENTIAL
PERF 12,580.16,701' (16 STGS); WAITING ON PIPELINE
FRACING_._..—..._,_—..._._.___...........__ .............___._..__..—___....._.l
WAITING ON FRAC
PERF 16,506-16,700'
WAITING ON COMPLETION
SET 5" TO 16,824' W/ 650 SX
TD 1-10-10• PREP TO RUN CASING
DRILLING
DRILLING
PLUG BACK FROM 12,150.11,350' PREP TO DRILL LATERAL
SET 7 5/8 TO 11,550' W/ 1690 SX
DRILLING
DRILLING
11-21-09
SPUD 11.21-09' SET 10 3/4 TO 1917' W/ 821 SX; DRILLING
330' FNL 8 2616' FWL OF SEC 10. PBHL: 330' FNL 8 2240' FWL OF SEC 3.PERFORATIONS
SERIAL NUM COMPLETION DATE UPPER PERF LOWER PERT SANDS RESERVO{R
240372 03/16/2010 12580 16701 HA
WELL TE5T5
TYPTEST DATE RPT DATE PqT CONn GAEL WATER BSW% ~RDW SPRESN CNOKE
PERF LP RFC BOp SOLE
DT-1 04/20/2014 05/01/2014 233
11/01/2013 ~0 __~ 374
9~ 40
15 40
~ 40
~ 40
~ 40
15 40
15 ~
50 40
.244 40
24 12254 16731
24 12254 16731
24 12254 16731
24 12254 16731
24 12254 16731
24 12254 16731
24 12254 16731
24 12254 16731
24 ~ 72254 16731
26 12580 16701
DT-1 10/25/2013
DT-1 04/25/2013 05/01/2013 203
11/01/2012 171
05/01/2012 302
11/01/2011 570
05/01/2011 1126
11/01/2010 2728
05/01/2010 10823
03/21/2010 19714
DT-1 10/26/2012
DT-1 04/27/2012
DT-1 10/27/2011
DT-1 04/27/2011
DT-1 10/27/2010
DT-1 04/27/2010
SDMZG 03/21/2010 946
WELL AILOWABLES
EFFECTIVE DATE END DATE LUW CODE LUW TYPE CODE ALLOWABLE ESTIMATED POTENTIAL CURRENT ALLOWABLE TYPE07/01/2014 12/31/2014 616100 ~ 233 233 3
http://sonlite.dnr.state.la.us/sundown/cart~rod/cart_con wellinfo2 7/22/2014
Wells
~O1/01/2014 06/30/2014 616100 ~2 374 L374 ~~3
07/01/2013 ___~ 12/31/2013 616100 _~~ ~ 203 203 ]3
01/01/2013 06/30/2013 6161000171 x171 307!01/2012 12/31/2012 6161000302 ~02 301/01/2012 06/30/2012 6161000570 570 307/01/2011 12/31/2011 616100~1126 1126 ~301/01/2011 06/30/2011 61610002728 2728~~3
_ -__l
07!01/2010 12/31/2010 616100019714 19714 -~3
04/13/2010 06/30/2010 616100 C~19714 19714 ~303/16/2010 04/12/2010 306353019714 3LEASEIUNIT~WELL PRODUCTIONRPT DATE LAW CODE STORAGE FAC DOC USE
05/01/2014 616100
04/01/2014 616100
CASING
Page 2 of 3
COMP EIONCS ZEG WESI ZE RE USETR H
TEST DATEWEIGHT SET EPTH SACK4 PRESSURE PRES
UREERPULL D PROCEOS
DEPTN
01/16/2010 0512 0612 23 ~~ ~
16824 650 8000~
02/15/2010 WELL
http://sonlite.dnr.state.la.us/sundown/cart~rod/cart_con wellinfo2 7/22/2014
Wells Page 3 of 3
L, uuu~JU UL Iu~~HISTORY01/16/2010 0758 0978 29.7
~
11550 --
1689 300012/15/2009HISTORY
01/16/2010 1034 1312 45.5 ~1917 821 1000~~11/24/2009_J
HISTORYPLUG AND ABANDONP and A DATE LOCATIQN TYPE CASING CUT TYPE ~ASING CUT DEPTH MUD WEIGHT LEFT COMMENTSPLUGS
PLUG TYPE ~ UPPER PLUG DEPTH LOWER PLUG DEPTH SACKS OF CEMENT SLURRY WEIGHTTUBING AND PACKERS
COMPLETION DATE TUBING 51ZE TUBING LOWER DEPTH TUBING UPPER DEPTH PACKER DEPTH
03/16/2010 02803/08 11595 ~~0 11575WORK PERMITS
RNUMBERE APPDATEION
EXPDATEON ERPE S gMls STATUS DATIE UOT~H WORK_PERFORMED
~RECEIPTDAT'EN SAND DESCRIPTION
http://sonlite.dnr.state.la.us/sundown/cart~rod/cart_con wellinfo2 7/22/2014