American Oil and Gas Reporter - October 2016 - 101

ConventionCoverage: Eastern Kansas Oil & Gas Association
Denman decision into rules, which will
help solidify the situation so the KCC
does not have to change requirements
for a few years, and then change them
again, he offered.
Korf related, "The rules and regulations
committee probably will conduct three
or four meetings, and then the rules will
go through the KCC's Oil and Gas Advisory Committee, then to department administration and the attorney general's
office. The rules then go to the KCC for
final hearing. So you have several chances
to voice your opinion."
To resolve future leasing disputes, Korf
said the KCC staff had recommended the
agency not hold an operator responsible
for a lease after he had sold it, as long as
all its wells were in compliance when he
sold the lease-either temporarily abandoned,
plugged or producing. The staff also has
recommended owners of leases bought or
sold between the dates of the Quest order
and Denman decision could turn over to
the state, wells they did not want. Korf
emphasized the commission does not have
to follow staff recommendations.
Tax Changes
Kansas has made changes in tax law
dates that have the potential to affect oil
and gas operators, advised Lynn Kent
with the Division of Property Valuation
in the Department of Revenue. One revision limits production information used
to establish fair-market value of producing
leases to the first quarter of a calendar
year in which the property is assessed,
while the other changes the certification
date used by county appraisers, she told
EKOGA.
When a county determines property
values, data from the previous calendar
year is used to help estimate currentyear value, but it may include first-quarter
production of the current year as per the
Division of Property Valuation's Oil &
Gas Appraisal Guide, Kent described.
"However, some small claims court cases
have allowed further than that first-quarter
data,"she said.
Kent cited one small claims court
ruling that allowed a taxpayer to use current year's production data that extended
past that April 1 filing date to the end of
the year.
"The law was changed, and now says
data have to be limited only to that firstquarter date. You cannot go beyond the
scope of that first quarter, unless it is a
brand-new lease that began production

LEFT: Steve Korf, District 3 supervisor for the Kansas Corporation Commission, tells the
Eastern Kansas Oil & Gas Association the agency wants to discuss with Kansas operators
how to deal with abandoned wells on leases. RIGHT: Lynn Kent with the Division of
Property Valuation provides an update on tax laws. One revision concerns production information used to establish fair-market value of producing leases, while the other changes
the certification date used by county appraisers.

Oct. 1 or later. Then you may go with the
first six months, which is logical, legitimate
and practical," she assessed.
State legislators also rewrote laws governing when county appraisers must certify
property value for tax purposes, Kent
continued, saying the change may not
directly affect oil and gas operators, but
that its repercussions could impact their
filing process. She said before legislators
acted, appraisers had to certify property
values to county clerks by June 15. Kansas
law now requires that action by June 1.
"I am not really sure why (lawmakers)
decided to change it," she mused. "This
gives county appraisers 15 fewer days to
certify their values. Oil and gas renditions
have had 15 extra days, to April 1, compared with other personal property filings.
The County Appraisers Association is
working with its lobbyist to try to change
the due date for oil and gas renditions to
March 15: the same date as all other personal property renditions are due."
Kent recalled that the last time Kansas
changed the rendition date, in 1994, it
proved to be a hardship for oil and gas
producers, especially larger companies
working in the state's southwestern counties. "The counties thought it would work
well for them, but it did not work well
for industry. So, the very next year, the
law was changed back," Kent said.

"In my view, with the amount of
turnover, where Kansas is going has
changed," he assessed. "It really appears
this was rejection of Governor (Sam)
Brownback's policies. A lot of candidates
who won primaries are saying they are
hearing on doorsteps that this is all about
the governor."
Bruno said at least six Kansas Senate
races were very competitive, as were as
many as 15 House seats, adding that this
November's election results would be
crucial in determining the direction of
Brownback's last two years in office.
The major issue for the 2017 legislative
session will be the state budget, he predicted. Many people see it as structurally
imbalanced, a viewpoint that Bruno indicated was reinforced by the primary
results. Legislators are likely to re-examine
Kansas' income tax system, including
the pass-through entities that benefited
from the governor's 2012 tax reforms,
Bruno said.
"I have heard no discussion of any oil
or gas exemptions and things that hurt
the industry," Bruno noted. "I am hopeful
that discussion remains the way it is.
Just know that there will be a tax discussion; what it ends looking like is anybody's
guess at this point."
❒

Legislative Update
Presenting a political update, EKOGA
lobbyist Tom Bruno told the association
the August primary elections resulted in
a significant turnover among state legislators.

Coming In November
Drilling Fluids Technology special reports, highlighting the latest
breakthroughs in fluid systems and
additives.
OCTOBER 2016 101



Table of Contents for the Digital Edition of American Oil and Gas Reporter - October 2016

Contents
American Oil and Gas Reporter - October 2016 - Cover1
American Oil and Gas Reporter - October 2016 - Cover2
American Oil and Gas Reporter - October 2016 - Contents
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