Texas Oil Well Servicing Tax

A taxoil derrick of 2.42% is imposed on the gross amount received in the performance of certain services associated with oil and gas wells. This tax is imposed on any person who is in the business of providing one of these services for a fee and who either owns, controls, or furnishes the tools, instruments, and equipment used in one of these services or uses any chemical, electrical, or mechanical process in providing these services.

The primary services subject to this tax are:

  • Cementing the casing seat of an oil or gas well;

  • Shooting, fracturing, or acidizing the sands or other formations of the earth in an oil or gas well;

  • Surveying or testing the sands or formations or the contents thereof in an oil or gas well using instruments or equipment located at least in part within the well bore.

However, these services may not be subject to tax if they are performed by a person in connection with the person’s business of drilling or reworking of an oil or gas well.

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