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Microcap & Penny Stocks : OILEX (OLEX) -- Ignore unavailable to you. Want to Upgrade?

To: CHRISTINE who wrote (3750)	7/23/1998 3:06:00 PM
From: CHRISTINE	Respond to of 4276

Also found this run down of the Marginal Well Production Tax Credit amendment. From IPAA homepage ipaa.org Marginal Well Production Tax Credit The Problem. In less than a decade, America has lost more than 2.1 million barrels per day in domestic oil production, which has fallen to its lowest level in more than 30 years. Oil imports have soared to unprecedented highs. U.S. drilling rates have set all-time record lows over the last five years. At the same time, foreign countries are providing incentives to attract investment in new drilling and production. Of America's 600,000 oil wells, nearly 500,000 produce less than 3 barrels per day, making U.S. oil production the most price-sensitive in the world. The National Petroleum Council reported that marginal wells: "produce 700 million barrels of oil equivalent per year, one-third of lower-48 onshore domestic production, representing $10 billion of avoided imports each year.contribute nearly 80,000 jobs and generate close to $14 billion per year in economic activity." Nearly 65 percent of oil is left in the ground with traditional production methods. With recent advancements in technologies, the United States has the technical capability and know-how to significantly increase production from marginal properties. However, to recover much of the nation's existing resource base of 350 billion barrels of oil, wells must be kept on line and in production. Once a well is shut in, its production and valuable reserves are lost forever. For all of these reasons and more, during periods of low prices, the U.S. must have a mechanism in place to maintain some level of existing marginal well activity to preserve the industry infrastructure and to expand U.S. oil and natural gas resources. Without such "safety nets," hundreds of thousands of U.S. wells and the tens of thousands of U.S. jobs they support will be lost when prices fall. The Solution. The Marginal well Production Tax Credit amendment to the Internal Revenue code will establish a tax credit for existing marginal wells. Marginal oil wells are those producing less than 15 barrels per day or producing heavy oil. Marginal gas wells are those producing less than 90 Mcf a day. The amendment will allow a $3 a barrel tax credit for the first 3 barrels of daily production from an existing marginal oil well and a $0.50 per Mcf tax credit for the first 18 Mcf of daily natural gas production from a marginal well.ÿ The tax credit would be phased in and out in equal increments as prices for oil and natural gas fall and rise. The phase in/out prices are as follows: OIL - phase in/out between $14 and $18 GAS - phase in/out between $1.40 and $1.80 For example, if the year-end domestic first purchase price of crude oil was $18, the credit would be $0.60; at $16, the credit would be $1.80 and if the year-end price was $14, the credit would be the full $3.00. Similarly, if the year-end domestic first purchase price on natural gas was $1.80, the credit allowed would be $0.10; at a $1.60, the credit allowed would be $0.30 and if the year-end price was $1.40, the credit allowed would be the full $0.50. The amendment would allow the tax credit to be offset against regular and the alternative minimum tax (AMT). In addition, for producers without taxable income for the current tax year, the amendment would provide a 10-year carryback provision allowing producers to claim the credit on taxes paid in those years. The carryback credit may be used to offset regular tax and AMT