All taxes in Version 3.0 are handled using fiscal models. TRC Consultants has written a default tax model for each state, as described below. These models may not exactly match a tax sheet from each state in the US component by component (States can have several taxes associated with a product, for example), but we blend all the components together to model the overall State or Local tax. The State tax models reference the Static Variables for that state. The static variable values used in the models are the tax rates set by each state. Users may want to review these values to makes sure they correspond to their interpretations of the tax requirements for their assets. See static variables on how to edit the existing values. The default state tax model along with any exemption and an explanation of what it does is presented below.

Default State Tax Model

All default State Tax models for the United States, will follow this naming convention – “Country/United States/State Name”. For example, Country/United States/Texas or Country/United States/North Dakota. The way that the default taxes are calculated in PHDwin is identical from state to state, with the option to enter custom tax rates for each state.

Model rates & variables

The following values are set up as static variables for the default tax model. These are defaults for the template that you can adjust, and you can also override the variables on a case by case basis.

Oil – State Production Tax Variables

•StateTaxOilPercent – The tax percentage rate applied against Oil revenues to calculate the state production tax. This percentage should be entered as a rate between 0 and 100 (for example, 5 = 5%).

•StateTaxOilDollarRate – The tax dollar rate applied against shrunk Oil volumes to calculate the state production tax. The unit for this value is essentially going to be the base currency/base product unit (for example – $/bbl).

Gas – State Production Tax Variables

•StateTaxGasPercent – The tax percentage rate applied against Gas revenues to calculate the state production tax. This percentage should be entered as a rate between 0 and 100 (for example, 5 = 5%).

•StateTaxGasDollarRate – The tax dollar rate applied against shrunk Gas volumes to calculate the state production tax. The unit for this value is essentially going to be the base currency/base product unit (for example – $/Mcf).

NGL – State Production Tax Variables

•StateTaxNGLPercent – The tax percentage rate applied against NGL revenues to calculate the state production tax. This percentage should be entered as a rate between 0 and 100 (for example, 5 = 5%).

•StateTaxNGLDollarRate – The tax dollar rate applied against shrunk NGL volumes to calculate the state production tax. The unit for this value is essentially going to be the base currency/base product unit (for example – $/bbl).

Condensate – State Production Tax Variables

•StateTaxCondensatePercent – The tax percentage rate applied against condensate revenues to calculate the state production tax. This percentage should be entered as a rate between 0 and 100 (for example, 5 = 5%).

•StateTaxCondensateDollarRate – The tax dollar rate applied against shrunk condensate volumes to calculate the state production tax. The unit for this value is essentially going to be the base currency/base product unit (for example – $/bbl).

Local Tax Variables

•LocalTaxCombinedPercent – The percentage that will be applied against all revenue less all net state taxes to calculate the local (ad valorem) tax. This percentage should be entered as a rate between 0 and 100 (for example, 5 = 5%).

•LocalTaxCombinedDollar – The tax dollar amount applied to calculate the local (ad valorem) tax. The unit for this value is essentially going to be the base currency unit (for example – $).

Model calculation

The following formulas utilize the variables listed above to calculate the default United States production & ad valorem taxes in PHDwin.

   State Tax Oil = (Oil[Rev,Grs] *   (StateTaxOilPercent/100)) + (Oil[Grs, Shr] * StateTaxOilDollarRate)

State Tax Gas = (Gas[Rev,Grs] * (StateTaxGasPercent/100)) + (Gas[Grs, Shr] * StateTaxGasDollarRate)

  State Tax NGL = ((NGL[Rev,Grs] * StateTaxNGLPercent/100)) + (NGL[Grs, Shr] * StateTaxNGLDollarRate)

State Tax Condensate = ((Condensate[Rev,Grs] * StateTaxCondensatePercent/100)) + (Condensate[Grs, Shr] * StateTaxCondensateDollarRate)

 Total State Tax Net = ((Gas[Rev,Net] * (StateTaxGasPercent/100)) + (Gas[Net,Shr] * StateTaxGasDollarRate)) + ((Oil[Rev,Net] * (StateTaxOilPercent /100)) + (Oil[Net, Shr] * StateTaxOilDollarRate)) + ((NGL[Rev,Net] *

(StateTaxNGLPercent /100)) + (NGL[Net, Shr] * StateTaxNGLDollarRate)) + ((Condensate[Rev,Net] * (StateTaxCondensatePercent /100)) + (Condensate[Net, Shr] * StateTaxCondensateDollarRate))

 Combined Local Tax = (((All[Rev,Net] – TotalStateTaxNet) * (LocalTaxCombinedPercent/100)) + LocalTaxCombinedDollar)/RevInt

Total Tax = CombinedLocalTax + StateTaxGas + StateTaxOil + StateTaxNGL + StateTaxCondensate