These are general tax provisions currently applicable to the oil and gas industry in Louisiana. As with all tax situations, each individual should consult a tax advisor to determine if these guidelines apply. Also, these tax provisions can be changed by the State of Louisiana and/or the federal government.
Drilled and Completed Well
Intangible drilling and completion costs are written off when incurred. In some situations up to 85% of the total drilling and completion costs can be written off in the first year.
Tangible costs are depreciated on a 7-year accelerated depreciation basis or on a units-of-production basis.
Acreage, geological, and geophysical costs can be written off on a units-of-production basis.
Up to 15% (depletion allowance) of all production income is tax free.
All costs are written off as incurred.