Case Study: Property Tax

Saving an Operator Tens of Millions Annually

Saving an Operator Tens of Millions Annually

CHALLENGE

A publicly traded independent oil and gas producer had deployed artificial lift solutions in wells spanning multiple states. However, taxing jurisdictions were inflating appraisals on those wells by factoring in production increases achieved—without recognizing associated expenses. The company engaged Merit Advisors to identify cash tax savings opportunities.

MERIT SOLUTION

Merit began by conducting a thorough review of the client’s well appraisals. Applying a holistic approach that encompassed expenses, burdens and post-production capital expenditures, our team:

  • Negotiated directly with taxing jurisdictions on our client’s behalf
  • Secured favorable appraisal adjustments based on the client’s substantial artificial lift investments

RESULT

Merit helped reduce the client’s anticipated annual tax liability by $29.8 million. We also provided a firm estimate of value-based annual tax liability at mid-year, even though varying appraisal methods across states and the client’s well population made these projections difficult. Finally, Merit streamlined processes in the client’s property tax function to improve efficiency.

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CHALLENGE

A publicly traded independent oil and gas producer had deployed artificial lift solutions in wells spanning multiple states. However, taxing jurisdictions were inflating appraisals on those wells by factoring in production increases achieved—without recognizing associated expenses. The company engaged Merit Advisors to identify cash tax savings opportunities.

MERIT SOLUTION

Merit began by conducting a thorough review of the client’s well appraisals. Applying a holistic approach that encompassed expenses, burdens and post-production capital expenditures, our team:

  • Negotiated directly with taxing jurisdictions on our client’s behalf
  • Secured favorable appraisal adjustments based on the client’s substantial artificial lift investments

RESULT

Merit helped reduce the client’s anticipated annual tax liability by $29.8 million. We also provided a firm estimate of value-based annual tax liability at mid-year, even though varying appraisal methods across states and the client’s well population made these projections difficult. Finally, Merit streamlined processes in the client’s property tax function to improve efficiency.

The Rewards of Merit
$29.8
million
Annual cash tax savings