Assessment Process

There is no statewide severance tax on oil and gas production in California. There are ad valorem (property) taxes in California, administered by each county. For information on ad valorem taxes, contact the county tax assessor in the county you are interested in.

There is a small statewide assessment on oil and gas produced in California. This assessment goes to support the Department of Conservation’s Division of Oil, Gas, and Geothermal Resources (Division), and is levied pursuant to Article 7, Division 3, of the Public Resources Code. The assessment rate is established in June of each year, and is based on the Division’s estimated budget for the ensuing fiscal year and the total amount of assessable oil and gas produced during the prior calendar year. This rate is then imposed on each barrel of oil and each 10,000 cubic feet of natural gas produced. The assessment rate for fiscal year 2015/16 is $0.3243123.

Producers are required to report production to the Division monthly and, for assessment purposes, to file a report each year showing the amount of assessable oil and natural gas produced during the year. Yearly totals are compared with the sum of the monthly figures and any discrepancies are reconciled. Assessment Notices are then prepared and sent to each producer prior to June 15 each year. The Assessment Roll is delivered to the State Controller on the first Monday in July. If the total assessment is under $500, that amount is due on or before August 15. If the assessment is $500 or more, one-half of the amount is due on or before August 15 and the balance on or before February 1st of the following calendar year. Substantial penalties and interest are levied on delinquent payments.