1. 1. In accordance with Section R649-3-23, each operator desiring to claim a tax credit for workover or recompletion work performed must submit this report within 180 days after the workover or recompletion work is completed. Upon determination and notification by the division that the described work qualifies for a tax credit under this rule, the operator may claim the tax credit on reports submitted to the Tax Commission during the third quarter after completion of the work.

2. 2. The following workover and recompletion operations qualify for a tax credit:

   2.1. perforating;

   2.2. stimulation, acid jobs, frac jobs, solvent treatments, nitrogen cleanouts;

   2.3. sand control;

   2.4. water control or shut-off;

   2.5. wellbore cleanout;

   2.6. casing or liner repair;

   2.7. well deepening;

   2.8. initiation of enhanced recovery, excluding surface equipment and associated costs;

   2.9. change of lift system, excluding surface equipment and associated costs;

   2.10. gas well tubing changes, down-sizing; and

   2.11. thief zone identification and elimination.

3. 3. The following workover and recompletion operations do not qualify for a tax credit:

   3.1. pump changes;

   3.2. rod string fishing and repair or replacement;

   3.3. tubing repair or replacement;

   3.4. surface equipment installation and repair; and

   3.5. operations generally classified as routine maintenance or repair.

4. 4. Division approval is conditional subject to audit, and actual final expenses may be disallowed if they are not appropriate workover or recompletion expenses.

KEY: oil and gas conservation, reporting

Date of Last Change: February 24, 2022

Notice of Continuation: June 30, 2025

Authorizing, and Implemented or Interpreted Law: 40-6-1 et seq.