State Ex Rel. Oklahoma Tax Commission v. Texaco Exploration & Production, Inc.

¶ 1 The dispositive issue in this proceeding to review a certified interlocutory order is a pure legal question: For purposes of gross production and petroleum excise taxes, what is the method to determine gross value of gas where there is no arm’s length sale of the gas at the wellhead? We conclude that in the absence of an actual arm’s length sale at the wellhead, the correct method to determine gross value of gas for calculation of gross production and petroleum excise taxes is the prevailing market price method or the work-back method, whichever results in the higher value. Accordingly,…