Achieving Cash Tax Savings for a Multi-State Producer
Client:
A regional independent oil and gas producer with multi-state assets engaged Merit to reduce liabilities and find efficiencies in its property tax function.
Results for client
$400k
Annual Cash Tax Savings
$1.6M
Reduction in Property Tax Liability for Mineral Leases
Challenge:
Client sought to reduce tax liability while also streamlining processes, taking into account the varying appraisal methods used across states and client’s well population.
Proposed well appraisals were inflated as taxing jurisdictions factored in production increases gained through artificial lift without recognizing associated expenses.
Client needed a strategy to address tax liability implications of planned acquisition that would double the company’s size.
Merit Action Plan:
Negotiated directly with taxing jurisdictions following a thorough review of appraisals.
Secured favorable appraisal adjustments for client’s wells based on substantial artificial lift expenditures.
Applied a holistic approach encompassing expenses, burdens and post-production capital expenditures.
