House passes package of oil and gas tax measures aimed at lowering oil severance tax and offsetting revenue with gas changes

The Louisiana House of Representatives on May 7 passed a package of bills that together change severance tax rules for oil and gas production, a legislative effort sponsors said is intended to lower the oil rate, attract drilling, and preserve long‑term production.

Representative Guymon presented the package. "Our goal is to reduce the severance tax on oil so that we can, energize the industry to begin to drill and to bring in more oil and gas back into our state," he said on the floor. The key measures passed include a reduction in the oil severance tax rate and an adjustment to the number of months that horizontally drilled wells receive an exemption.

House Bill 600 lowered the severance tax rate on oil from 12.5 percent to 6.5 percent; sponsors said the move is designed to make Louisiana competitive with neighboring states. The House also passed a companion measure that shortens the horizontal drilling exemption from 24 months to 18 months (House Bill 4 95) and a technical, placeholder measure for severance tax administration (House Bill 5 18). Sponsors said the change to the gas exemption period is intended to offset projected revenue loss from the lower oil rate.

Representative Guymon acknowledged the bills are interdependent and presented them as a package: "We have to have all 3 to make it work," he said. Fiscal notes presented on the floor showed the oil rate reduction would create an $87 million shortfall over five years; sponsors said adjusting the horizontal exemption would generate approximately $99 million over the same period, producing a net change roughly in balance in the five‑year forecast. "So the 2 bills together in the current form would actually generate $10,000,000 of additional revenue," Guymon said while noting negotiations remained ongoing on technical details.

Lawmakers asked whether the package would affect jobs and production. Representative Echols asked directly, "Will this make us competitive with Texas?" Guymon responded that the measure was designed to make Louisiana competitive with Texas, Mississippi and Arkansas and that he expected the change to stimulate activity.

All three instruments advanced: House Bill 600 passed 89–7; House Bill 4 95 passed 97–2; House Bill 5 18 passed 96–0. Sponsors and supporters said the bills are intended to be enacted together, and some recognized that if any bill in the package fails the negotiated balance would be lost. Several members requested further details before final votes on later stages.

The measures change tax policy for oil and gas producers; the bills as passed set new tax rates and exemption periods and direct the Department of Revenue and other administering agencies to apply the new computation rules. Sponsors said they will continue technical negotiations as the package moves through the legislative process.