Section 11.83.241. Production tax lease allowance.

	(a)  The production tax lease allowance for purposes of 11 AAC 83.240(b) is the greater of zero or the amount calculated by subtracting the tax credits, if any, under (b) of this section from the greater of the following two amounts:  
		(1) the sum of  
			(A) the monthly production tax net revenue under (c) of this section multiplied by the net profit deductibility factor under (e) of this section multiplied by  
				(i) 22.5 percent, for a month before July 2007;  
				(ii) 25 percent, for a month after June 2007 and before January 2014; or  
				(iii) 35 percent, for a month after December 2013; and  
			(B) the lease-allocated tax based on price index under (d) of this section;   
		(2) the product of  
			(A) the percentage rate that would be applicable under AS 43.55.011(f)(1) - (5) if the phrase "calendar year" were replaced by the phrase "month of production," based on the average spot price during the month as calculated under 15 AAC 55.171(m) for ANS; and  
			(B) the production revenue under 11 AAC 83.222 less the royalty owed to the state under 11 AAC 83.242.  
	(b)  The tax credits for purposes of (a) of this section are  
		(1) the product of  
			(A) the fraction obtained by dividing the amount of oil and gas in Btu-equivalents produced by the lessee from the NPSL during the month and taxable under AS 43.55.011(e), by the amount of Btu-equivalents of oil and gas produced by the lessee statewide during the month and taxable under AS 43.55.011(e); and  
			(B) 1/12 of the maximum amount of the tax credit for the calendar year calculated under AS 43.55.024(c)(1) or (2), as applicable, but substituting in that calculation the lessee's average amount of oil and gas in Btu-equivalents, as defined in 11 AAC 83.295, produced a day statewide during the month and taxable under AS 43.55.011(e), for the lessee's average amount of oil and gas in BTU equivalent barrels, as defined in AS 43.55.900, produced a day statewide during the calendar year and taxable under AS 43.55.011(e);  
		(2) for a month after December 2013, the product of $5 and the number of barrels, if any, of oil, other than state royalty oil, that is produced from the NPSL during the month and that meets one or more of the criteria in AS 43.55.160(f);  
		(3) for a month after December 2013, the smaller of  
			(A) the product of the number of barrels, if any, of oil, other than state royalty oil, that is produced from the NPSL during the month and that does not meet any of the criteria in AS 43.55.160(f) and the dollar per barrel amount that would be applicable under AS 43.55.024(j)(1) - (9), if the phrase "average gross value at the point of production" were replaced by the phrase "NPSL production revenue under 11 AAC 83.222 attributable to oil other than state royalty oil, divided by the number of barrels of oil, other than state royalty oil, produced from the NPSL"; or  
			(B) the greater of zero, or the following amount:  
A minus B minus C, where  
"A" equals the greater of the amounts calculated under (a)(1) and (2) of this section;  
"B" equals the total amount of tax credits under (l) and (2) of this subsection; and  
"C" equals the amount calculated under (a)(2) of this section.  
	(c)  For purposes of 11 AAC 83.209(b) and (a) of this section, the monthly production tax net revenue equals the lessee's production revenue under 11 AAC 83.222 net of the lessee's royalty payments under 11 AAC 83.242, except that for a month after December 2013, the lessee's production revenue under 11 AAC 83.222 net of the lessee's royalty payments under 11 AAC 83.242 is multiplied by 0.8 for oil and gas that meet one or more of the criteria in AS 43.55.160(f) less the following amounts:  
		(1) the lessee's direct operating costs during the month under 11 AAC 83.240, excluding the production tax lease allowance under (a) of this section and abandonment costs allowed under 11 AAC 83.240(e); however, if the NPSL is within a unit subject to AS 43.55.165(j), for purposes of the calculation under this paragraph the lessee's direct operating costs during the month are replaced by one-ninth of the lessee's direct operating costs during the period April 1, 2006, through December 31, 2006, multiplied by the following factor:  
			(A) 1.03 for a month in 2007;  
			(B) 1.061 for a month in 2008;  
			(C) 1.093 for a month in 2009; and  
		(2) the lessee's development costs under 11 AAC 83.219 incurred during the month less the product of $.30 multiplied by the amount of the lessee's working interest Btu-equivalents of oil and gas produced from the NPSL during the month, including any overriding royalty share of oil and gas share of oil or gas.  
	(d)  The lease-allocated tax based on price index for purposes of (b) of this section equals, for a month   
		(1) before July 2007, the amount of tax calculated under AS 43.55.011(g) and (h), as those provisions read on June 30, 2007, but substituting in that calculation, on a per Btu-equivalent basis as applicable, as "Btu-equivalent" is defined in 11 AAC 83.295, the monthly production tax net revenue under (c) of this section, for the monthly production tax value of the taxable oil and gas as calculated under AS 43.55.160, on a per BTU equivalent barrel basis as applicable, as "BTU equivalent barrel" is defined in AS 43.55.900;  
		(2) after June 2007 and before January 2014, the amount of tax calculated under AS 43.55.011(g), as repealed and reenacted by sec. 17, ch. 1, SSSLA 2007, but substituting in that calculation  
			(A) the monthly production tax net revenue under (c) of this section, for the monthly production tax value of taxable oil and gas as calculated under AS 43.55.160;  
			(B) the lessee's Btu-equivalents, as defined in 11 AAC 83.295, of oil and gas produced from the NPSL divided by the net profit deductibility factor for the month under (e) of this section, for the BTU equivalent barrels, as defined in AS 43.55.900, of taxable oil and gas;  
		(3) after December 2013, zero.  
	(e)  For purposes of (a) and (d) of this section, the net profit deductibility factor  
		(1) equals one for a month  
			(A) before July 2007;  
			(B) after June 2007, if the development account beginning debit balance less the monthly production tax net revenue under (c) of this section, if any, is positive or zero;  
		(2) otherwise is calculated according to the following formula:  
Before January 2014  
NPDF =  (1 - NPR) / (1 - (.25 * NPR)),  
After December 2013  
NPDF =  (1 - NPR) / (1 - (.35 * NPR)), where  
"NPDF" equals the net profit deductibility factor; and  
"NPR" equals the net profit share defined in the lease expressed as a fixed percentage of the net profit payment account.  

Authorities

38.05.020;38.05.180

Notes

Reference

11 AAC 83.209
11 AAC 83.240
11 AAC 83.245
11 AAC 83.290

Authority

AS 38.05.020 AS 38.05.180

History

Eff. 2/13/2010, Register 193; am 1/9/2014, Register 209