shale gas best practices - bertison-george, llc · 2015. 3. 6. · 15 bertison-george, llc...
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Bertison-George, LLC
PIOGA Winter Meeting
Feb/24-25/2015
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Review of Historic Development
Severance Tax / Impact Fee – By the numbers
Summary
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Act 13
Impact Fee
Implemented
Severance Tax / Impact Fee – By the
numbers
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$7,500,000 - County Conservation Districts/State
Conservation Commission
$1,000,000 - Fish and Boat Commission
$1,000,000 - PA Public Utility Commission
$6,000,000 - Department of Environmental
Protection
$750,000 - PA Emergency Management Agency
$750,000 - Office of State Fire Commissioner
$1,000,000 - Department of Transportation
$2,500,000 - Natural Gas Energy Development
$123,151,200 - Direct to Counties and Municipalities
(includes Housing Funds)
$82,100,800 - Marcellus Legacy Fund12
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13
Sourc
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014 P
HA
RE
Pro
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Variables:• Spud wells
• Commodity
Price
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Variables:• Production
• Commodity
Price
• Production
• Commodity
Price
• Spud Wells
• Commodity
Price
Results:Tax Method:Ohio:
2.5% Gas
$0.10 Oil
WV:
5% O&G +
$0.047 “temp”
PA:
Impact FeeOH and PA based on Unconventional production only. Utilizing HH pricing estimates will cause results to be overstated.
Ohio Ohio
Impact Fee Severance T ax
2012 8,855,000 448,526
2013 28,260,000 3,371,345
2014 15,850,000 10,107,110
52,965,000 13,926,982
PA PA *
Impact Fee Severance T ax
2012 204,210,000 168,717,253
2013 202,472,000 347,560,733
2014 225,752,000 523,779,237
632,434,000 1,040,057,223
* Utilizing Avg. HH Pricing and 3% Severance Tax Rate
Under Wolf proposal = $697 million 2014
WV WV
Impact Fee Severance T ax
2012 28,980,000 98,567,066
2013 13,410,000 114,252,434
2014 ?? 232,003,111
42,390,000 212,819,500
2014 Sev Tax Not included in total
Temp Fee Avg. 3.94%
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5% Severance + $0.047 per Mcf • Estimates that the total impact would be 5.8%
• For $0.047 to equal .8% the natural gas price
would need to equal $5.88 per Mcf.
• Based on Current HH March pricing $0.047 would
equal ~1.7%. ($0.047 / $2.83)
Total 6.7%
• Transco Z6 trading at a $1.8671 (premium Non-
winter months trading at a discount)
Total value $4.70 Vs. $5.88
Impact on conventional production
Cuomo won’t be in office for ever
Act 13 have resulted in hundreds of millions being
collected
• State and Local agencies have benefited
• Pennsylvania citizens have benefited
Can you spell OH..
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Questions for Wolf:• What will the split be between impact funding and
pensions/general fund?
• How can we find a Wolf administration’s math 101
tutorial?
• Factored into their analysis?:
How much additional gasoline taxes will be collected
from production companies and supporting industry
moving their equipment?
As always, the devil is in the details!
THANK YOU!
Joe Baran
Principal
Bertison-George, LLC
www.bertison-george.com
412-258-5262
Bertison-George, LLC
Office Locations:Headquarters Financial Branch4031 Old William Penn Hwy 200 Schermerhorn St
Murrysville, PA 15668 Brooklyn, NY 11201
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