Legal. Drilling Tax Credits Heads to TX Supreme Court. Legislation Forthcoming.

What’s this Texas Supreme Court case about? Whether the equipment, used underground, in the oil and gas world, is entitled to a manufacturing tax exemption.

What did the other courts do? From the bench the district court said, yes, the tax exemption aplies. Then the district court issued a written opinion that reversed the oral statements. The court of appeals agreed that underground oil and gas equipment is not entitled to a manufacturing tax credit.

When will we know what the TX Supreme Court says? Sometime after the March 8, 2016 oral arguments.

What’s the legislative outlook? Two options:

• If the exemption exists, the state will amend the tax code to recoup the lost revenue
• If the exemption doesn’t stand, oil and gas, can move to clarify that underground equipment does qualify for the manufacturing tax exemption.

Your Oil & Gas News | Texas Supreme Court schedules oral arguments in southwest royalties case