Case Information
*1 $38 OFFICE OF THE ATTORNEY GENERAL OF 7EXAS '..
AUSTIN .,. .~ . ~ --~
-o.yuac --
?
I '.
e sands or other ny suoh oil or Tcgarardlng the follow- p tsksa a contraat fmm the op- : Z~ a well for a stipulated psi06 ‘~ e&500 sadka oz" oeuceint). Bill I. : "2. There ia a~ tool known ah--a 'aemmt .. ~' packer* which is used in ae~entingllners In v;eu.s. Tibia tool in lmsed or rented to the owner of the well or contraotor Sor Q ret or $12 per day operators tlco, plus oar tillaage to looation a& oporetirts ~XIWUWB. ?iould tha *2 I mnorable George H..Sheppard, Pade 2 party who maelves rent i’pr the ‘paoker*-,be
subjoot to the tax on the rental reoelved or
rental plus expenses 0r the operator?
“3. A mechenlcol perforator 1s used. ln- stead of a eun perforator. Uylll the tax apply \’ for such ssrvlpe?
“4. A~idihfng - the oontraotor make8 tViO * charges to the ‘operator of a weli; one, la for
the acid used; ths other for the scrvloe rec-
dered. i’Ill1 the receipts iron bo+& be taxable?
“5. ii ooitraotor take3 a contraot to ‘oleau out an oil well, part of the work will .consist .of acldizlng or ehootlnh. WI11 the receipts of ‘. .I “_ i. .~ the entIN. job be taxable~,’ or will’. thd oontr’aotor ‘, ,’ . be .permltted to meke two separate bllllngs.~ and .~ ‘:~ j
tax aocrulng only On aoldlzlng Or' aho+lng serv-
’ Ice?” ‘.
The aimer to soue of .iour questlois oallsior the ’ dcter&lnatlon 6i the neaning of oertaln words used In aone ..
zieotlon with a pertloular ‘trade, to-wit; the oil and @as produolng business. iWl6le LO, sub-paragraph 1, .Etmlsed Civil atatutes OS Texas, says; ,
Vhe’ oidl&ry~ 6igaifloatlOn s&i1 be s&plied to word~s,’ exaept words ot art or words connected ‘.
with 6~ partloular .tradq or. subjest titter, when
they shall have the sl&nlfioation attaohed to ~. : .’ _‘, ,, .-then by eqerta ln~duoh art or trade; with'ref-.
ynce to suoh aubjeot matty.* ” “’ 9. 1. 3% realize that w13 are n& experts ‘in the’ oil and +?$s pro- duolng’ business, and we hesitate to’ plaas a asaning on som ‘. . . ;
~.cS~.~ha~trode words laqolved~ in .-a opinion; but It. 1s ouz duty .to .tiaviss you on :the .Varlous “1ea;al‘questlons that ocm, ~~‘.. betom you,’ agd .ln’oti ,lnexp&rt way be wlll~‘prooeod to ado ~o~r’dutti.I~y antiooerlng your’quostlons even thou& we mast as- certain Qk .teohnlcal trade neanlng of oertaln. word& I .., . .
The gartlkular statute in queitloh “1s paragraph (bg, Seotion $, of %rticle .16, Eouse Eill No. 8, Party-seventh.’ Legislature, which r,aa$s .a8 hollows: .' .':
xonorable George H. Sheppard, Paga 3
n*(b) Every warson In this State onuamd In the bu&ass-c? furalchln& any z&iio;j & parfoming any duty for oth!irs for a conslbsra- tion or ooapcnsation, with the use of any de- doe, tools, inetrumnts or equIpcent, elootrlt.
onl, mechanloal, or othontisa, or by mans of any ohcmioal., eleotrloal, or moha~loal pmoeso when such servioe Is performd In connection
with the oamntlng of the casing seat of arg
oil or gas well or the ahcotinz or ccldizin;:
the formation of auoh wells or tho mrvoying ortestln~ of the cmds or other formtiona of the earth of any such.011 or gos GUS, shell
report on the Mth of eaoh month and pay to the ComptrolJer, at his offloe In Austin, 'i'sxas;
'.. .~ an oaoupatlon4xx 6qua.X to tvm and two-tenths, .. (2.21 pe.r oent of the p;ross~ auount risaeivood .. from asid. servlo.e'fumlshed or duty.perforxmd, dtiring the Oalendar month 'next. gamedlAg; The
said report shall bq.erGcuted. under oaC1 on
;mf&~r~~eesorlbcd and.. fur+hsd by the. ConpY ." 1' '. Tho,key word id tl& statute, In determining _ . _ .- - _.
tne answers to your questlons, Is mmvice". 'ille persons taxed are those persons~~Wfurnishing any ncrvlce or perform- b&m; uutut .* * . when euoh sorvioe Is parfoaoed in oon-
(1) the aekiting oft the casing seat of any .,~ "I ,.... 011 or gas .weU'or (2) the'.shootlng or (3) aolU1zin.g the fornations of ruoh wells or (4) the surveying ortesting of the sands OT othe~,~.fornatlons oi ~the oarth,la any suah 011 or gas wells", and the tax Is "two anU'.two-tenths (2.2) per oent.of the gross amount reoalved from said service
i:e think thle ,le a tax on ~~~l~~;;~fO~d.,
In,arrivlng at anfmera to your' questions we'want " :. to point out that them is a dlstlnotfon betgeen d-*sale" and a %ervloe*. Likewise there Is a dlsticotioa between the phrase %aterlals iurnl&edw and then phrase wservloee iurnished.~
2110 IS a now statute, aad thcrofore we are un- cble to find any appellate court aaae direotly in point on thla situatlon;.but we do reoelve so&e help from the language Of casen from other states, oonstruing what constitutes a ..i
f.
honorable George Ii.' Sheppard, ?age 4
sale as Qlstingulshed from a norvlae tithin the meaning ZTkles tar laws. In the aamiseman v. Gillioz, 192 Ark. 915, 96 I;. E. (2Cl) 459, the Suprcse Court of &icansas held that when a btildinz oontraotor ereoted a house under an agrarmont by wkiah the aontrautor fur- nished the material and lcbor for a given EUC It constl- tuted a S&e Of the meterials, and tiX3! FElrt Of the sum oi l "he materials was subjeat~ - which was &$ven In pQymult to the sales tax; ana the oourt saia: .':
n mey 8ay he does not sell the houses; thet hi ~o&struots or coots them; and that, he most certainly doos not sell the lime, cement, lImbor, and stsel whlah he uses and oonsumes in rabrioatlng the oompleted struoture whfoh he
ereots upon aad under, the own~r*a rapa. ‘~ WC? Courses one WC&? noi Say that ;th8 :. :
contractor sold'the house, but unquest1onebly ~. he sells tho materiel that goes into the house. ~, It.~oae should oontraot to' furnish the material.
: ,'.. ,~:isna labor andbuila a'houoe for the owner/he
G0oula neaessarlly estimate or oalpulate t&e : value or.tha material ruinishea and the .owner
'would heve'to pay ror3.t. The aontractor Would
sell this to the owmr. . ." A 8lmila.r holding was made in the 'aase or. %teenth Street ,Investxent Corporation v. People, 81 Paa..[Zd) 764, by the .... supreme court ot Colorado, in whioh the aourt saitl:. .. .~
We cannot, as a oourt,'be'lgnorant or what all men know: that a aontraot lnvolvlng
lebor and materials which become a constituent part of axr improvement, the cnvnership ot whioh - paeses to the owner of the ma1 estate, in-
volves a transfer or title to the mterials ; ‘~ror a considerstion. Thet work and labor is
to be done upon or in oonnection with the mater- .~ ials es an inaident to or in conneotionwith
the transrer of title to the materials, doe6
not rob the trensaotion or its essential char- aoterlstlcs of a sale ii' the whole or any measurable part of the oonolderntion for tDs
perrormanae of the contraot is oompensation
ror the materials. . . ." . _. ,342
Honomible George H. Shapgard, Page 5 & exoellant dlsaussion of whhathor a transaotion is a sale or a eervioe or a Mxture 0r both is round in the aasa7 zestem Leather EC Finding Co. V. Stats Tax’ Ccainission, 87 Utah 227, 40 Paa. (2d) 526, In whiah tho Eupraslo Court of Utah held that when a shoe oobrjler rarairs a pair of shoes by sewlog”‘new lcathcr on to tfro shoes it constitutes a sale or the loather and the aobbler’s- ohzrge 1s not made entirely ror servicee. The Cisoussion In t!xit oas6 .ia 80 excellent that wa quota at laneth Srom’ it as follows:,
-. . . It the oharge nade rdr regalring -’ shoes oonstitutes a sale by the shoe repairer to the owner ol the shces or the mtariels used fn.ths repair jobs, then ena in suuh case under the express provisions of tho aot the plaI,ntifY is not liable for the payment or the tez hare 3’ .~ . sought .to ba .iap~sod upon it, .+, t “: ,: ._” _,__ ._ n . The mere iaot that the Xaather and. : 1~‘. .: .>, . .._ other s??tarials hero in question were used to .. .make .only a part of a shoe. Qoos not ohange tha : __ ‘. nature of ths .transaotlon. A ‘sale of coeds’ la ‘defined as .*an agreement whereby the seller transrors thqr proparty 5.n. goods to the buyer. -: ;.~for a consideration aalled the prloa. * R. S. .: :
Utah 1933, 81-1-l. A sgla 18 in effect so da- rinea in’the aat hera .involvetL ‘#hen ashoe’. ’ regafrer dellvors the ‘repair& ehoes to the :‘, : ‘owner thoreof snd receives yayxent therefor,
the title to the mterlals used in the recalr ~. lob pasees to the onner. lhe amount Baid
‘. *The problem oan ba best approached by ‘nssumfng extreme asses on both ends cl’ the &&EI.&.
Ytaen a barber shaves a Ferson, the lather and seep and soothing Jotion which go upon the cus- tomar are mere inoidcntals as oomgarad to the
Eonorable George H. Sheppard, Page 0 ; It la Ilkewlse~ tl-W or shoe
service pm0rmt3d. shiners. These Illustrate asses on one enit of the gmut. Where a nerohant sells readyzcade clothing and In ooaneatlon therewith iloos al- terations and perhaps furnishes rmterlals, suoh as a rzall pleae of cloth or thread, we have a case In vihlch tho sorvlcos are izerol~ lnolde5taI - to the sale. Other oases lie inbetween. The auto5oblle repair shon furnishes rar,ts as vln as scrv ocs. ‘ihe parts may at thea amount to 5ore than tha services md other tims vise versa. SOE~ tr&des hzVs lOag CuStO!Yarily their GGparated ahorges for aerviaes and parts. The autor2oblle repair trade lo an exmple. more it Is quite _’ easy to 5ake the eeparatlon beaause the parts are
usually very deflnlte. In ~the shoe repalrlng ltidusttiy, 105 theother hand’, the. .practlae’ has.,- ,...‘.: : ‘. been just the cpposlte. A gross oharge le mada .. %. .~ ~_ .. without separation. Indeec¶, it night be dlffi- oult to: aake the separatloa ln this trade beoauss ._ .. ) ‘_.. of the alffloulty of d5temfnlng Just .how nuoh leather out fro5 a larger ~pleae goes into each, job.* ..(Undersaorlng ours)
0’ther sales tax cases that 5ake similar holdings are Cuslak ’ v. ComonweaIthi 260 Ky. 804, 84 S. XL (zd) 14t Wby v. State
‘iax Ooromlssion, (Ala. ) 114 So. 233; iX$sbp P. Johnson, {Calii. ) 09 Paa. (2d) .2681 and C, & E, Zkm3hl 0. .v* &es, 373 13.3.. : _ 381, 26 IL E. ‘.t2d]~4&3.
The only Texas ~Ap~ellate ao.Wti oaee fram which we
reaeive any help in decldlng this question is the case or Stmdard 011 Company or Texas v. State* 342 S. Vi. (26) 519. .~ .~ In that case the uerendant oontended that when automobile tires, tubes, battories or other aooessorles were installed on an automobile snd a single oharge rcede Por. the transaatlon that suoh a transmtloa was a %3ervloo* only and not a %81e” ‘80 as to mahe .the opsratdl;iji of the iilllng station where the transaotlon oaourrea subjeat to tbs “chain store tax”, but the Court oi Civil AppeaIs held that a “sale” ot said artl- 01es took plaae, and it to evident that the oourt thought that a part or the sum aharged rapresented the sale grloe or .. the article and the ranala&r represented the oharge for the . service of installing the artiole.
The noun Raervioew l& datined in Kebsterla Eew InternatlokiL Dlotlonary, 2nd Edltloa, as follovmt *7 #.,. ’
. A!&4 fionorable George IL Sheppard, Pam 7
flPerfoma?snoe OS labor for the benefit of e&thsr, o$ 3t another's ootrzand." , .
The foregoin& diotloaary doflnltloh snd appellate ooufl oases show that there io a dlffcronoo between furnish- 1~ a mataria 6na fUnl.5hing a oorwioc. Ye 8x6 oonvinooa th3t the tax in qUoRtion is a tax on the SGrVicillg Of oil ~cnd ges welln masured by the gross receipts &rived from "service rurnfsheu~ in ce7t3in oil cind gas well oPor3tions; 3ua it is not on the furnishia~ of mtarials to 05.3. and ~35 veils. Therofcrc, a rnrty who acmnts 3 casing seato? en oil or g35 well for another person, end who furniches the 00mnt for mid o~smtlon, L * sntitlod to deduot the oost of mid oezent rroni his gross receipts before ooxputinfs the tax.
'. I ', : oq anm~r.to your flret question fs ;yes*,~ . . . _._,,....' ,.;. : ,;,,, ~...("
ve wiil~n6w take up your seoond inquiry, &oh deal8 with the furnishing ei a Wo821ent.paoker1*. Since re- oeivi.ng your request Sor. this .opinlon, you hevo advited us that this Wo&xmt packs??* is. “made up with an& form a part ..I of.the liner berore it is rU into the well on& this tool ..- ien;ains in thei ~11"; and you.also advigql us tAbat the con-:: '1, ~'. .'. cein turn&shlag the "cemmt peokeFch3rCes:the owner of .,
the well ~$22.00 per day operator(8 tins plus oar nileage totbe location and.' . . . operator's expenses", and that the operator,~o,tig knetalls the *oezeht packer' and doe8 ~ not hew eny part ,in the aotual bexentlhg operatioa.n '_
be uncerstana that the "oment paokcr" in question ~~, In such a mahner ia a devioe or material that is furnished that It becomes a part of'the ~~11. .It is lowered into the :: ~011 and used there ,only for the purgose of oemnting the ...:,;~ mliner", whioh ia a particular type of shortoasing: at or near ‘the bottcrm of the well. But, after the liner ia ownted.
the "packer" oamiot be removed. (see uPetroleun Psoduotlone ~~ by Wilbur F. Cloud, 1931, page 165; 169; "Elements ai the ?ed troloun Industry", edited by E. De Golysr,. 194Cj pages 234i' and *Perforated.CasinC end Coreen Pipe in Oil bells*,.by IS. ( _~ W. &I&y, u. 9. Btieau of iLines Teohnioel pnper 34y)::
3'0 are oonvinoed that the "cement ieckor* in dues- tlon‘ls 3 x3terinl furnished, and that the char@ fcr the a3m is for mteri32 furnished azd not ?or a ssrvice furnish- ed. Iiowevari that &*rt of the ohorge l&t is-or the iurnlshlng or the operator is a oharge ror a service, the service or lnstalllng the Woem3nt.paokerW. The hot that
./' ~~
._ *8 w.. a45 Donorable Georg FL Sheppard,'Page 8
part of said olzar&~ is based on ocr mileage and part on operntor'n e-case does not prevent It from being a charge for a service. A person could hire a day laborer to per- sol-9 soi?ze kind of service at 73.00 par tiny pluo his trevel- lm expense to and Srom the job each day (20$ ror car fare) and his eotual expenses while on the job (45d for his noon day lunch), or a person oouXl hire such a laborer for $3.65 per day, the leboror to pay his own traveling expense and other actual expense1 and, it [13] our opinion that in either case all oS the monny rocelvcd by theaborer woul& be com- pensation ror oervices furnisha&.
Before giving our answer to your se.oond question wa.want.to again mentl.op,that the tax in question applies . . . . .onlpnhen the servioe is perSormed.in oonneotlon oiith one oi:
sour speoirioally named idil and gas well operations, to-wit, (1) ~oeize~tine; 0s the easing seat,* (2) ?shooting,w (3) "aoSdizin&the Sormations," ard f4)..Hsurveyi5g or tastln2 of the annilo.* '26 have not been given any inSormetion show- 'in2 that Install152 a,.:oement.paoker*, or even.oementfng .a Qnern, is one of the Sour named taxable operations. If ~~ i .._ it Is riot one oS‘tho8e fbur operations the reoeipts there- rrom are not to be oonsidored in ooi$puting the tax.
The furnishing OS the Woamsnt Daoker" is the Sur- nishing OS a material, and the Surnlshing of the operator 18 a service rurnished. Q\;r answer to your seoond question ‘.
le that &f-the Surnishlng and lnstalll~ or the *oement paoker" in que8t5.05 is one of the Sour taxable operations named in the statute, the charge Sor furnlshln(I the wocmmt packer" should not be inoluded in the reoeipts on which the tax Is oonqutcd and the~dharge Sor rurnlshlng the operator should be inoluded.
.We will now take up your third lnqulry, whloh la in regard to meohanioal perrorators. %e are adv%sed that -wperSorati5/fw, as that term is uoed in the oil and gas pro-. duoingbuslness, is the operation OS breaking holes through the walls OS the easing In a well SOr the purpose of making omnunication into or out oS the earth tcrmatlon et that particular level. (See "Elements of the Petroleum Industryw, edited by E. De Golyer, 1940, pop3 229) There are two ordinary methods or WperSorating", to-mit, "gun p6rSOrati5g' and %eohenlcel perTorating*. Gun DerSoratine; is rarerred tG in 'Tundementals of the Petroleum Industry*, by Dorsey Bagar, 1939, at page 246, as roilma: *9 . . .
I
Honorable George H. Sheppard, Page 9
"Gun Perforators.'- k great improvasent In the teohnique of ooo~pleting wells has re- sultad froze the development of the gun parfor- !Mo devfce firm .45-caliber bullets atsr. through the oaoing, and even through any aen;ent in back of it, and penetratea through to the gas or oil zonen. w
The seuo authority at page 247 dloousses zecbanloal perfor- ati= as folloxs:
wPerforations nay also be aade by lcwerlng a cutting tool, oalled a. 'perforatoy, 4 in the ', tool oontWt8 or 8 rolling hole. ,Ws knife .., i ~.~. ~ '. -.-j. : whioh fs 'a" eta&'-shtipod' toothed whe&l: with out- .~. ..~,. ..; ,. tfng points; After the' oaring ia perftiated,
the well is b&led to remove the SUM%, sludge, ,- and drilllog v4atey.e
., YOU questioo.appaxently refers .$o this iast mentioned .- m&hod. .i_
As heretofore indicated 'the tax in quaation ap- plies only when the aervtioe is performed in oonneotion with ~p~~ifi~'ioaug ne3l0d 0s aa gfi8 ~011 0g0rtiti0ns, 0~6 0r row to-wit, (1) *ceplenti% of the o&sing seat", (2) nshootQ&g*, ..: (3) '*aoidiziug the fornations*, and (4). %?urveylng' or test- .~ 'ing CJS the amdam.
Aft& roa%ing your written request for our opln- 'Irro un%arstand you have in mind ion and tdklr@ with you, the question of whether the use of a meohauioal perforator ., '1 aoastltutea "shootfug=.
'We &st give the word ushootingV the meaning that ~.ie attaohed~ to it la the 011 and gas'produoiag trade. In "%+rolsun Produotion*,, by Wilbur y. Cloud, 1937, at pages CC1 and 403$ it sayat:
*Oil well ahaotingdatee baak to the .tine when Colonel E.k.L. Zobezts exploded eight pounds of (;u.npo~xke at a depth of 433 feet In the Ladies bll on Katson Plats near Tittusv5lle, Pehnsyl- vanla, in Tanuary ; 1865. Durin.c, ths latter pazt of Yuly, 1866, the Roborta Torpedo Company ~8s granted a patnnt oovsring this process of
increasing oil well prcmu3tion."
Eonorable Caorge IL Sheppard, Page 10 :
“At prosont ,there am throa types of ox- .’ plonivea uaed ior sh@oting oil wells: liquid
oitroglyoerin, solidiiied nitroglyoerin, nnd
gelatin dynamite. 02 theso the liquid had been
used most; however, the solidified form,is sarer and more vn?iable in ap;licntion Snd resetion."
.wOllwcll shooting is not prectioel in : all 011 fial15s; but IS sonfined lar.Sely to I wells or nreas that rroduoe from hard, compaot’, ‘_ close-grained fxndstoncs and IirceStones. Soft
and unconsolidated rocks, which are typical of .' the Gulf Coat area end 6ertnin California,
fields, do.not respond to shooting; and for that reason shooting is,ra^&er unocnzon.in those. .; regions... : .' : .’ . _:: ,, _ : ,. : . _ ‘. ‘: ’ "Sh0&ixig oil .v~el.ls 'i& $ioduotioa’~ay be ” : ..’ .) done for one of sevorcl reasons: An apparently i, try hole mrry have b&on drilled, +nd before the: I. ' ~011 is abandoned ‘some operators may &et-off,‘a; :’ !’ oharge of nitro~lyoerln-as a linal &tort to- : .‘- . r ;. vard.'brin(fiag in~sn~oil,~ell. Also, in Some ~11s when dril..Jed intotight sands and..krd. :._ '~ . llms, the reservoir rook maybe 0nly partly~ 'e ..saturated with oil; andvery~Zittlc:gas may be :
present. Jyroquently the .shooting of such for- :: F,-:C'. .
. '1 xutiona .rdaultS in the completion of-good corn-~;;;,.,; . . ylowinff wells era given.
~~maroiil oil,xel.la. ,,,,;~:" light 'shots* or .nlt.rcSlyceria, blasting ~el,lS... .i. ',.: ..: '~
.ars &ivea light *shot6* of nitroglycerin, blast; . ,': ;'~. "~ '-in2 g&atin, Or glyoeri.nite, to clean-out the
well and fraoture the sand f'aeo, .thuS prolong-.
ing the period of notural- f'low. ,X:tny old pump-. ".' ', ing wells are Shot. pf3riodloallyto stimulate
drainqe into the well." ;., _. .', _ I& wyadamentels of the .Petraleum.Industrg’,.~y‘~,~Y~,Bagari I .: .1939, at.pa$e 235, it Sayst ,, .’ '~".
Whootfng aooomplishes several ~purposes, .: .R.'
speoirioally, it ,
“1. iWx&s~up the EMdStOReS or linestones, oauf3ing~ohennels to for+
"2. Opens passages to fraotura zones or to _: ._ j *11 Rcnorable George X. Sheppard, Pace 11
joint planes In whloh oil, may ooour.
"3. rorms a hr&tr WJlleOtiAfZ area. “4. Creates nore seepage spaoe in the hole. .*S. Createe a vacuum that sucks in the Oil, sturting it through channels iAt. the well.* xn th oaec of Texas Granite Oil Cospa~y v. Mlliarzs, 199 xy. 146, 250 S. \1. Clc,, the court ~e~t10~ed "ahcotlngW of IU~ oil well as r0u0w:
"It is a ratter or OOE!!OA'hAo7.'lcdC;e that the shooting of an oil oell is done alway at a tise.wbeA the,well is at or Ae,ar~ooniplet~on, . . : ', -'.' -ot when the' 05.1 sand has beed .rahohedj‘the pur- .' . .: .. ,"" ~'
pose being.to'loosen the fornation to, the end that the f'l~~of 011 znay be &oreaseg?.W ~~ Ye think that it is appareAt that Wperforating* . . an oiL.well Is sltogether dlff%rent.from ?shootin@ 89 oil
uoll.~ Zðer the ~mparfcratiAg*~.ls dmiswlth a *gun per-- ..- iorator* or.8 %echaniosl parSorator", it' does not come Vii$hiAthe ~eaAi~3 Of %he tcS'a "shooting". Other author- '.
itlee that support this conclusion are as followa: Well- stootlnG~with Rcterenoe ~to Secorzary Oil Reoovery", by ., Ii, L!. Ryder, Gil 6: Gas Journal (. Pay 6, 1837) 683 "Zell 'MatmAt after PerforafiAgW,-by B. Bankis, Oil Weekly :' .(Yaroh28, 193G) 36,.011 & Gas JourAal (Maroh 31% 1938)
176; and "Gun Perforator Utilized in ~Scmfordyoe dield for Conpletlon oi Oll'%~ello~~, by T.P. %&lers, 011 & Gas Journal (July 33,, 1936). 53. : ,; ,, i. *
We have @me to aonsiderable~lmgth to show that "perioratlAg* Is note inoludad in the. term nshooti~W, and that it is not uned in connection with aald term, because we ubdors^&nd that a COnfUSiOA of thoec terms gave rise to your question. Io th,e operation of mperforatinG* ever per- tomed aa a part of or in oonneotion with any of the other taxable operationer, to-wit, "the o,ene~ntlAg of the oaslAg mlt,", *~aoldiziry: the fomatioAs",~or ffsurveyfng or testing cf the aaAds"? Pro3 our study we hove CGZB to the oo~olusion that it crdiaarilp Is not,.but there nay be scxe u~ust.ml instencea iA which it is perfomed in oonnectionwlth OAe Of said three operations:, .~
&Aorable George fi. ~2hepparb. Pa&e 12
Om ansasrto your third question is-that the tex in question does not apply to the ordinary use of a 9ieohanioal perforator", but It would apply if a vxeohan- ical p.erSoratoP w3reueed in connection with one of the four taxable operations.
38 will now teke'up your fourth inc,uiry, Miioh concerns ncldiZiA&. IA w~lOZOAtS Of the %Jt~O~SlliB b- awry*, edited by B. OoGolyor, 1940, p,qe 225, it ~says:
n,:oldizatioA, in the oil iAd.ustry, is the proocss OS introduoina aoid Into the pore ': (;,. space of An aoid-soluble produoina fomatlon for the purpose of enlargln6 the pm8 by dls- y . . . . ‘.~.: ’ ‘~ : ~olvi,~ surroun~r@ $omatlOn and thsr?eby .i.n- ; ~:- :‘t \.’ ,::‘::: :.~ . . “.. oreasln5 the pez%mabilltp of the *pay* around ~',' ~_,. .+: the well bore. This n&hod ot enhanoing the ,_ .' produoiA& ability of certain oil-@educing strata'applies prfnulpally to the aoid~soluble xoservolr rooks, suoh as limstono and dolomite, ._, : but:oooaeionallyit lo used in.eaad formation. .._ ; to dissolve aemnting materials. . iv.
I. Re believe the sax6 reasoA8 .ayply~in enmerfng . questioA that apply .%a answering- ybur Sirat, ijuesti,qn,*~.~ .., ,. < .,,, this As harotoSo?e pointed oqt', there? v;Sioh OOAOtWA& ,Oanient, Is a difference b&we&A Surofahing a mtsrlel ad Surnlsh-...~‘~~~~~~“‘. 1~6 a serviae. %e SurAishiAgoS the acid' is the ru33e.h- : :. '. In& 0s a.materlal. Yhe.tax Is on1y.011 the servicing OS oll'and ga8 v@ls, 'and It OaAnot be oaloulatod on the re- *' ceipts derived Sron: Suxnishlnf materials. Cur answer to ycur fourth question lo the-at alparty who aoldlzes a well for another, end'Surnldes the, acid, 18 entitled~todeduot ~~. 1; cost of said'aoid Srom his~&roee reoeipts beSore 0~: ..., the putlq the tax.
Ze will now take up your fifth i.n@&y, whioh " conoerns cluaniag out (~11 old well. A8 we have stated so Amy times b&ore in this opinion, the tax iA question ap- :. plieo only when the servioo Is porforme$t in eoAAeotioA with one or the Sour 011 and &as well operations speolfioally named aa taxable ~4x1 the statute. "Shootfng" is ona of tIma operations, end Waaldizingw is another, an8 therefore tha receipts from nshootlAgW Ind *aoidizin@ are taxable.
1. '. ., i ;
COMMlTl-PI