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November 15, 2024
This chart shows royalty rates and severance taxes* across different U.S. states. These rates are used to calculate full cycle cost for oil and lease condensate. The rates are an average because, in each individual case, the actual rates can be different.
West Virginia and Montana have the highest total taxation rates, both nearing 30%, with a significant contribution from severance tax.
Texas and Oklahoma have totals around 25-27%, with a relatively higher severance tax component.
Colorado, New Mexico, and North Dakota show combined royalty and severance tax around 20-22%.
Ohio, Pennsylvania and California have the lowest total rates (~15-17%) as they don’t have severance taxes.
The chart does not include ad valorem taxes which can be imposed in certain jurisdictions.
* Royalties are paid by oil and gas producers to mineral rights owners. Severance Tax is imposed by states on producers. In addition, there may be ad-valorem taxes imposed by local authorities.