Administrative Rules of Montana
Department 42 - REVENUE
Chapter 42.25 - NATURAL RESOURCES TAXES
Subchapter 42.25.18 - Oil and Gas
Rule 42.25.1806 - ALLOCATION OF INCREMENTAL PRODUCTION

(1) If the designated area of a new or expanded enhanced recovery project has wells reported for tax purposes prior to the inception of the new or expanded enhanced recovery project, both as pre-1999 wells and as post-1999 wells, the operator must report and pay any tax due at the appropriate applicable rates on the non-incremental and incremental for pre-1999 and post-1999 wells.

(2) The amount of tax to be paid at pre-1999 and post-1999 tax rates will be based upon a production ratio determined each calendar year.

(3) Incremental production to be reported as pre-1999 wells is the amount of production computed when the pre-1999 ratio determined above is multiplied times the total incremental production for the quarter. The amount of non-incremental pre-1999 production to be reported is determined by subtracting the amount of pre-1999 incremental production from the total pre-1999 production for the project for the tax period being reported.

(4) Incremental production to be reported as post-1999 is the amount of production computed when the post-1999 ratio determined above is multiplied times the total incremental production for the quarter. The amount of non-incremental post-1999 production to be reported is determined by subtracting the amount of post-1999 incremental production from the total post-1999 production.

(5) The value for all production (incremental and non-incremental) in a project will be based upon an average price for the production sold from the project during the quarter.