Oil company asks for tax relief

A local oil company approached the county commissioners last week to ask for relief on the interest associated with their tax bills for the last three years. Understanding the difficulties companies like Ranch Oil have faced due to prices over the last half decade and additional difficulties such as the pandemic, the commissioners agreed to waive $40,195.79 for interest on taxes between the years of 2018 through 2020.

Jennifer McDowell, attorney for Ranch Oil, presented the request on behalf of Carl Dean, co-owner, and Tonie Cook, land manager. A sour crude producer, she said, Ranch Oil has operated in this county since 1987 and this is the first time they’ve made any sort of request for relief.

The reason for the request, she said, was, “The market pressure that all oil producers have been experiencing” since around 2015. This has included periods of low to negative oil prices; low transportation capacity; high expenses resulting from that lack of transportation capacity, “And then, of course, in 2020 we had the impact of COVID-19.”

Ranch Oil is an operator of wells in Crook County, but not the sole owner, she continued. The company owns a percentage of the wells, “say, 80%.”

The remaining portion is owned by other working interest owners, McDowell told the commission, who, “For the most part have not been covering their portion of the expenses.” This has left Ranch Oil to cover all expenses such as royalties and taxes.

Ranch Oil is not asking for a change to its tax valuation, McDowell said, which was $141,676.04 for the three years in question. “All they’re asking is relief of the interest,” she told the commission.

Following this, she said, Ranch Oil expects to settle all its outstanding taxes with one payment by November 1.

Dean expanded on the issues faced by Ranch Oil over the last few years, saying the company got through the bad differentials of 2014 but were then hit by the drop-off in late 2018 and early 2019, and production could not make money at those prices.

“We were accumulating losses,” he said.

According to Dean, the company’s aim is to avoid shutting down production while the wells are operating at a loss, as this would mean not having anything to sell when prices get better.

“The good news is we survived. It’s very difficult to make it as a small oil and gas company…a lot of my friends are not in business today,” said Dean, expressing his hope that the better differentials are here to stay.

“We haven’t had any of these requests in quite a while,” said County Attorney Joe Baron as he shared the applicable statutes and information with the board.

Commissioner Kelly Dennis asked if Ranch Oil can pay the current year’s taxes by December 31, which Dean and Cook confirmed would be possible. With that said, Ranch Oil will be completely current by the end of the year and Dennis indicated he would be willing to forgive the interest due on that basis.

“We appreciate you working with us, oil production in Crook County is important,” Dennis said.