Petroleum Science Corporation

2002 Oil & Gas Appraisal Guide

Kansas Department of Revenue




For wells producing casinghead gas, the revenue derived from the preceding year’s total gas production is to be converted to barrels of oil equivalent and added to the annual oil production. The conversion is made by multiplying casinghead gas in mcf by the net price per mcf which is then divided by the net price per barrel of oil received on the lease.


An oil well produced 18,550 mcf of casinghead gas for which the net price is $.50 per mcf totaling a gross annual revenue of $9,275 (18,550 mcf x $0.50 mcf); the net price for oil is $11.00 per barrel; then the revenue from the casinghead gas of $9,275 is divided by $11.00 per bbl to establish the gas equivalent in barrels: $9,275/$11.00 = 843 barrels to be added to the annual production in Sec. IV - Item 2, Casinghead Gas.



Note: This additional production is not to be considered in determining the annual decline or the exemption for low production or the assessment rate. However, the taxpayer should file a separate rendition showing gas production when oil rates are declining at rates greater than the natural gas rates or when gas oil ratios (GOR) are above 15,000 mcf to 1.00 bbl of oil.