Alaska oil, gas producers paid $813 mil in tax to state April 1

Juneau (Platts)--4Apr2007

Alaska oil and gas producers paid $813 million in lump-sum tax payments
to the state of Alaska on April 1 under terms of the state's new Petroleum
Profits Tax, officials said Wednesday.

The new tax law went into effect April 1, 2006, but industry taxpayers
were allowed to continue making payments under the former state production tax
until December 31, with a "true-up" payment -- a recalculation of the tax
under the new law -- due April 1.

State Revenue Commissioner Patrick Galvin told Platts that the payments
fell $137 million short of what the revenue department had estimated the
companies would pay. The department had estimated the lump-sum payments at
$950 million.

"We're examining how we made the estimate, as there is a possibility that
we underestimated the payments that would have been made under the old tax,
which would have had the effect of making the department's estimate too high,"
Galvin said.

The shortfall is of interest to state legislators, who are counting on
the industry payments in their work on the state's budget for fiscal year
2008. Oil and gas revenues pay for about 85% of Alaska's budget.

Alaska switched its oil and gas production tax last year from a tax
based on gross revenues from wellhead crude oil and gas values to a tax based
on industry net revenues, which allows deductions of upstream production
costs. A new Investment Tax Credit is allowed in the new law which allows
companies to credit 20% of qualified capital investments against their tax
payments to the state.

--Tim Bradner, newsdesk@platts.com