00 HOUSE BILL NO. 189 01 "An Act eliminating the concluding date that applies to calculate a producer's total lease 02 expenditures for purposes of administration of the oil and gas production tax during the 03 initial years of that tax, thereby allowing an indefinite continuation of a special formula 04 to determine the amount of lease expenditures that may be taken as a deduction when 05 computing the production tax value of oil and gas; and providing for an effective date." 06 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 07 * Section 1. AS 43.55.165(j) is amended to read: 08 (j) For purposes of AS 43.55.160, for a calendar year after 2006 [AND 09 BEFORE 2010], a producer's total lease expenditures, before adjustment under 10 AS 43.55.170, that are applicable to oil and gas produced by the producer from all 11 leases or properties from which 1,000,000,000 BTU equivalent barrels of oil or gas 12 have been cumulatively produced by the close of 2006 and from which the average 13 daily oil and gas production during 2006 exceeded 100,000 BTU equivalent barrels as 01 the unit boundaries were defined on January 1, 2007, are determined under this 02 subsection and (k) of this section. Except as otherwise provided under (k) of this 03 section, the producer's total lease expenditures, other than qualified capital 04 expenditures, (1) for calendar year 2007, are equal to the product of 1.37 multiplied by 05 the total lease expenditures for calendar year 2006, other than qualified capital 06 expenditures, that are applicable to oil and gas produced by the producer from all 07 leases or properties within the unit, as reported on the producer's statement under 08 AS 43.55.030(a) for calendar year 2006, and (2) for a calendar year after 2007, are 09 equal to the product of 1.03 multiplied by the total lease expenditures, other than 10 qualified capital expenditures, determined for the previous calendar year under this 11 subsection. The producer's total lease expenditures for a calendar year after 2006 that 12 are applicable to oil and gas produced by the producer from all leases or properties 13 within a unit subject to this subsection are the sum of the producer's qualified capital 14 expenditures incurred during the calendar year that are applicable to that oil and gas 15 plus the lease expenditures, other than qualified capital expenditures, that are 16 applicable to that oil and gas as determined under this subsection and (k) of this 17 section. If a producer whose lease expenditures for 2006 are used to determine lease 18 expenditures for a later calendar year under this subsection transfers an interest in an 19 affected lease or property to a different producer or if the unit area of the applicable 20 unit is changed from the area as it existed on December 31, 2006, the transferee's lease 21 expenditures applicable to oil and gas produced by the transferee from the lease or 22 property and a producer's lease expenditures applicable to oil or gas produced from a 23 lease or property within a unit area as it existed on December 31, 2006, continue to be 24 determined under this subsection using those 2006 lease expenditures. In this 25 subsection, "qualified capital expenditures" has the meaning given in AS 43.55.023. 26 * Sec. 2. This Act takes effect immediately under AS 01.10.070(c).