Oil and Natural Gas producers must file an Oil and Natural Gas Production Tax Return.
Oil and Natural Gas returns are available in our TransAction Portal (TAP).
Effective 7/1/23, with the passage of Senate Bill 426, the definition of Natural Gas has been expanded to include all forms of inert gas, including helium.
Montana taxes natural gas by percentage of gross value per cubic foot of natural gas produced and sold.
The gross value is the total cubic feet produced each month multiplied by the average wellhead value per cubic foot.
You may deduct any natural gas used in operating the well.
Total Cubic Feet - Production Used in Operation X Average Wellhead Value = Gross Value
| Working Interest | Nonworking Interest | Reporting Schedule | ||
|---|---|---|---|---|
| Primary Recovery Production | First 12 months of production | 0.80% | 15.10% | NG-INCENTIVE |
| Pre-1999 wells after incentive period | 15.10% | 15.10% | NG-PRE99 | |
| Post-1999 wells after incentive period | 9.30% | 15.10% | NG-POST | |
| Stripper wells averaging < 60 MCF per day | Pre-1999 wells | 11.30% | 15.10% | NG-PRE99 |
| Horizontally completed well production | First 18 months of qualifying production | 0.80% | 15.10% | NG-INCENTIVE |
Montana taxes oil production by percentage of gross value per barrel produced and sold.
The gross value is the total barrels produced each month multiplied by the average wellhead value per barrel.
You may deduct any oil used in operating the well.
(Total Barrels - Barrels Used in Operation) x Average Wellhead Value = Gross Value
| Working Interest | Nonworking Interest | Reporting Schedule | ||
|---|---|---|---|---|
| Primary Recovery Production | First 12 months of production | 0.80% | 15.10% | O-INCENTIVE |
| Pre-1999 wells after incentive period | 12.80% | 15.10% | O-REG | |
| Post-1999 wells after incentive period | 9.30% | 15.10% | O-REG | |
| Stripper Wells Averaging < 10 barrels per day for pre-99 wells or Averaging < 15 barrels per day for post-99 wells | Pre-1999 stripper oil | 9.30% | 15.10% | O-STRIP Pre-99 |
| Post-1999: First 10 barrels of stripper oil Average quarterly sales price reported for all Montana Oil < $30 per barrel | 5.30% | 15.10% | O-STRIP Post-99 | |
| Post-1999: Over 10 barrels of stripper oil Average quarterly sales price reported for all Montana oil < $30 per barrel | 9.30% | 15.10% | O-STRIP Post-99 | |
| Stripper Well Exemption or Bonus Averaging ≤ 3 barrels per day | Pre-1999 Stripper Well Exemption Average quarterly sales price reported for all Montana oil < $54 per barrel | 0.80% | 15.10% | OSTR-X3 |
| Post-1999 Stripper Well Exemption Average quarterly sales price reported for all Montana oil < $54 per barrel | 0.80% | 15.10% | OSTR-X3 | |
| Pre-1999 Stripper Well Bonus Average quarterly sales price reported for all Montana oil ≥ $54 per barrel | 5.30% | 15.10% | OSTR-X3 | |
| Post-1999 Stripper Well Bonus Average quarterly sales price reported for all Montana oil ≥ $54 per barrel | 5.30% | 15.10% | OSTR-X3 | |
| Horizontally Drilled | Post-1999 wells first 18 months | 0.80% | 15.10% | O-INCENTIVE |
| Incremental Production | New or expanded secondary recovery production | 8.80% | 15.10% | ENH-INCR |
| New or expanded tertiary production | 6.10% | 15.10% | ENH-INCR | |
| Horizontally Recompleted Well | Post-1999 wells first 18 months (on incremental production) | 0.80% | 15.10% | ENH-INCR |
Please see the First Quarter 2024 Incentive Letter for more information about the current oil incentives.
The average quarterly sales price reported by the producer for all Montana oil determines whether the stripper well exemption or the stripper well bonus is available to that producer for that quarter.
Starting January 1, 2022, on the OSTR-X3 schedule, there are separate Working Interest columns for pre-99 and post-99 wells under both the stripper well exemption and the stripper well bonus.
If a producer's average quarterly sales price is less than $54, then the stripper well exemption is available for that quarter.
If a producer's average quarterly sales price equals or is greater than $54, then the stripper well bonus is available for that quarter.
For new or expanded tertiary production (working interest taxed at 6.10%) approved by the board of oil and gas conservation between March 23, 2017 and February 18, 2019, the average price for a barrel of west Texas intermediate crude oil must be less than $54 a barrel in order for the incentive for incremental oil production to be available for that quarter.
The average price for the quarter ending March 31, 2024 is $77.5039.
Since the average price is not less than $54, this incentive is not available for this quarter.
First Quarter 2024 West Texas Intermediate Prices
New or expanded tertiary production (working interest taxed at 6.10%) approved by the board of oil and gas conservation on or after February 19, 2019 is not subject to any price trigger.
Tax exempt royalties:
Returns are due 60 days from the end of the calendar quarter.
| First Quarter | May 30 |
|---|---|
| Second Quarter | August 29 |
| Third Quarter | November 29 |
| Fourth Quarter | March 1 |
The Oil and Natural Gas Production Tax is subject to uniform penalties and interest.
We collect Oil and Natural Gas taxes and distribute the revenue between the state and counties. Each county receives a percentage of revenue as shown in 15-36-331, MCA.
The remaining revenue is divided: