Will mineral tax appraisers hit their valuations targets?

UPDATE…

—– Forwarded Message —-
From: kim feil <kimfeil@sbcglobal.net>
To: robert.cluck@arlingtontx.gov; robert.shepard@arlingtontx.gov; Robert Rivera <robert.rivera@arlingtontx.gov>; sheri.capehart@arlingtontx.gov; kathryn.wilemon@arlingtontx.gov; roger.venables@arlingtontx.gov; Stuart.Young@arlingtontx.gov; jimmy.bennett@arlingtontx.gov; michael.glaspie@arlingtontx.gov; lana.wolff@arlingtontx.gov; trey.yelverton@arlingtontx.gov; charlie.parker@arlingtontx.gov; trey.yelverton@arlingtontx.gov; jimmy.bennett@arlingtontx.gov

Sent: Tue, August 7, 2012 10:18:39 AM
Subject: update…open records not avail on who is (should be) choking back the wells…explain that to Grace Lutheran shorted on mineral valuations

I crunched some RRC production numbers and compared 3 UTA wells (1,2 &3H) producing in 11/08 to three wells producing starting in mid 2010 (8,12 & 14H), and only found about an 11% less overall production rate when I sampled the wells over a 26 month time frame.

The older wells averaged 56,000 mcf per month and the newer wells averaged 50,000 mcf per month…so I revised my blog post to explain the TAD valuations gaps to be mostly driven by the price of NG…..I am still waiting for the city to tell me who is choking back the wells so we can pat them on the back…but open records has no info on this.
We are missing 3 mandates in our ordinance
1) mandate emission control devices such as scrubbers for the open hatch flowback tanks
2) mandate Green Completions for when the well is cleaned up and salable
3) mandate choking back the wells during times of low natural gas prices of less than $5 or $6 per mcf…better yet wait til they get to $11-$15 like they are overseas…then we are maximizing our minerals….anything less is reckless endangerment to our financial and public health.

—– Forwarded Message —-

From: kim feil <kimfeil@sbcglobal.net>
To: robert.cluck@arlingtontx.gov; robert.shepard@arlingtontx.gov; Robert Rivera <robert.rivera@arlingtontx.gov>; sheri.capehart@arlingtontx.gov; kathryn.wilemon@arlingtontx.gov; roger.venables@arlingtontx.gov; Stuart.Young@arlingtontx.gov; jimmy.bennett@arlingtontx.gov; michael.glaspie@arlingtontx.gov; lana.wolff@arlingtontx.gov; trey.yelverton@arlingtontx.gov
Sent: Wed, July 18, 2012 2:01:33 PM
Subject: catch up on gas well production tax question/ heads up

I now have questions on when TAD over taxes on minerals valuations when production falls off.
I’ve been looking at TAD records and found that a Pantego resident was charged an average 2.35% tax rate as….
Pantego Resident Carrizo 1H well
2010 $660 tax value where resident paid $15 in taxes at 2.3% rate
2011 $460                                                       $11                   2.4%
2012 $180  and is scheduled to pay….        $ 4
Arlington Resident UTA Carrizo 14H well
2011 $160 tax value where resident paid $ 4 in taxes at 2.6% rate
2012 $140 and is scheduled to pay…        $ 3.64
Driller Carrizo taxes paid on UTA Unit A 1H well (at 2.6% rate)
2009 $101,000 mineral taxes paid
2010 $  48,000
2011 $  33,000 and is scheduled to pay…
2012 $  18,300
First Baptist Church Unit A 1H well (at 2.6% rate)
2008 not assessed although there was (Nov & Dec) production RRC# 244911 region 9
2009 $  1,183 mineral taxes paid
2010 $     697
2011 $     529 and is scheduled to pay…
2012 $     307
Grace Lutheran contested their mineral valuations and rec’d a 36% reduction….
Grace Lutheran UTA Unit B 24H well
2011 $618 mineral taxes paid and is scheduled to pay…
2012      0 (TAD has zero as assessed mineral value)
What a difference in TAD mineral valuations and taxes that two years (and two months) makes when your unit is developed at a later date. Grace paid 4.4 times less in mineral taxes than First Baptist. I’m sure they would have liked to have had the opportunity to have their unit be drilled first. (when the prices of NG were higher)
Could it be that the UTA unit A 1H-6H wells were (seismic) targeted as the best wells to be drilled first for their impressive Initial Production Rates for press releases, hype, bank loans…etc?
Or could it be that these first wells in Unit A drained the minerals from unit B & C’s area and shorted Estimated Ultimate Recovery numbers? http://www.ogj.com/articles/print/volume-106/issue-47/drilling-production/williams-compares-sequential-simultaneous-barnett-fracturing.html12/15/2008
Those are two questions that neighborhood associations can fight over. In the meantime, I have a slew of questions regarding where Chesapeake warns on their website that in some cases folks may pay more in mineral taxes than what is received in royalty checks due to any shut in wells.
“It is possible, although not usual, to receive a tax statement that is higher than your royalty payments if you had wells shut in for some portion of the year. This could happen if producing wells were temporarily turned off while new wells were being drilled on the same site. When the well resumes production, royalty payments will resume and the balance will be restored.”
Since TAD values minerals on Jan 1, how does the royalty payments “catch up” to the appraised tax liabilities since TAD doesn’t go by production reports?
Does the driller remind TAD which wells were shut in or “choked down” on production due to low natural gas prices?
Does TAD reduce that tax liability in time for the October tax mailings, or do they decrease the mineral taxes owed by that amount for the following tax year?
If the later is the case, couldn’t that result in the residents getting a refund on overcharged mineral taxes?
I feel minerals valuations should be automated/tied to the RRC production reports system. especially now that dry gas is in the bust stage.
The fallout of how this catch up program works is soon to occur, and our leaders need to get ready for the concerns from mineral holders who have been charged for “estimated” production that has been either delayed by….
well shut ins,
distorted by severe production decline curves,
purposely choked down production, (I have not heard back from Mr Venables on that list),
or if the driller cannot afford to (rework the wells) boost production to “catch up” what TAD has assessed as a tax liability on mineral values.
There are alot of zero value mineral accounts on TAD for 2012, 2011, & 2010. I think TAD has taken a conservative valuation stance, but the city may also be missing out on tax revenues deserved which is why we must begin to tie mineral valuations to the Railroad Commission databases. This would also save the county in paying for Pritchard and Abbott services who do the mineral valuations.

Kim Feil

About Kim Triolo Feil

Since TX Statute 253.005 forbids drilling in heavily settled municipalities, I unsuccessfully ran for City Council Seat to try to enforce this. Since Urban Drilling, our drinking water has almost tripled for TTHM's. Before moving to Arlington in 1990, I lived in Norco’s “cancer alley”, a refinery town. It was only after Urban Drilling in Arlington did I start having health effects. After our drill site was established closest to my home, the chronic nosebleeds started. I know there are more canaries here in Arlington having reactions to our industrialized airshed (we have 55-60 padsites of gas wells). Come forward and report to me those having health issues especially if you live to the north/northwest of a drill site so I can map your health effects on this blog. My youtube account is KimFeilGood. FAIR USE NOTICE: THIS SITE MAY CONTAIN COPYRIGHTED MATERIAL THE USE OF WHICH HAS NOT ALWAYS BEEN SPECIFICALLY AUTHORIZED BY THE COPYRIGHT OWNER. MATERIAL FROM DIVERSE AND SOMETIMES TEMPORARY SOURCES IS BEING MADE AVAILABLE IN A PERMANENT UNIFIED MANNER, AS PART OF AN EFFORT TO ADVANCE UNDERSTANDING OF THE SOCIAL JUSTICE ISSUES ASSOCIATED WITH EMINENT DOMAIN AND THE PRIVATIZATION OF PUBLIC INFRASTRUCTURE (AMONG OTHER THINGS). IT IS BELIEVED THAT THIS IS A 'FAIR USE' OF THE INFORMATION AS ALLOWED UNDER SECTION 107 OF THE US COPYRIGHT LAW. IN ACCORDANCE WITH TITLE 17 USC SECTION 107, THE SITE IS MAINTAINED WITHOUT PROFIT FOR THOSE WHO ACCESS IT FOR RESEARCH AND EDUCATIONAL PURPOSES. FOR MORE INFORMATION, SEE: HTTP://WWW.LAW.CORNELL.EDU/ TO USE MATERIAL REPRODUCED ON THIS SITE FOR PURPOSES THAT GO BEYOND 'FAIR USE', PERMISSION IS REQUIRED FROM THE COPYRIGHT OWNER INDICATED WITH A NAME AND INTERNET LINK AT THE END OF EACH ITEM. (NOTE: THE TEXT OF THIS NOTICE WAS ALSO LIFTED FROM CORRIDORNEWS.BLOGSPOT.COM)
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