2012 Assessors Price Projections
COUNTY ASSESSORS ANNOUNCE 2012 PRICE PROJECTIONS;
GAS PRODUCERS WILL BE BURDENED
The California Assessor’s Association's Petroleum Standards Advisory Committee (PSAC) has announced their recommendations for oil and gas price projections to be used for the 2012 mineral rights assessments (see table below).
This year’s starting price for 13 gravity Midway-Sunset crude is $95.50/bbl, up from last year’s price of $84.00/bbl. Natural gas prices start at $3.50 and escalate to $4.75/MMBtu by the year 2015. Oil and gas reserves are re-assessed each year in California as of January 1 based on projected future net revenues.
While each county Assessor is independently elected and free to use their own projections, historically most have followed PSAC’s recommendations. The PSAC projection is based on Brent Crude adjusted to California heavy with additional price adjustments for field specific gravities at $0.0425 per degree API.
Gas producers will be burdened. While the Assessor’s natural gas projection is relatively in-step with the January 1, 2012 NYMEX Henry Hub futures, natural gas producers will be burdened with assessments based on the 2012 forecast while trying to accrue and pay taxes with income earned on today’s historic low gas prices. Additional property tax accruals from both working interests and royalty interests would be prudent. Any new gas wells drilled (or significant recompletions) during 2011 are subject to supplemental tax assessments based on relatively strong gas price scenarios as well; last year’s assessments were based on a price projection of $5.00/MMBtu.
|
|
Crude Oil ($/bbl) |
$/MMBtu |
|
Year |
Brent Benchmark |
MWSS 13 Gravity |
Natural Gas |
|
2012 |
$104.00 |
$95.50 |
$3.50 |
|
2013 |
$96.00 |
$87.50 |
$4.25 |
|
2014 |
$90.00 |
$81.50 |
$4.50 |
|
2015 |
$98.00 |
$75.50 |
$4.75 |
|
2016 |
Flat |
Flat |
Flat |
