Updated: Energy company says its royalty owners ‘can make up their own minds’ how to vote after tax increase

A Texas oil and gas company sent a letter to Oklahoma royalty and working interest owners this week announcing their checks would be smaller moving forward, because of a tax increase passed by the Legislature in order to give teachers in the state a pay raise.

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The rotunda of the Oklahoma Capitol. BRIANNA BAILEY/The Frontier
A Texas oil and gas company sent a letter to Oklahoma royalty and working interest owners this week announcing their checks would be smaller moving forward because of a tax increase passed by the Legislature in order to give teachers in the state a pay raise.

Newfield Exploration Co. also included a list of the House and Senate roll call votes on the revenue package with the letter, listing how each legislator voted on the bill.

“Earlier this year, the Oklahoma Legislature increased taxes on gross production by 150 percent,” the letter said.

In response to The Frontier’s questions about the letter, Newfield Exploration said it has not trying to influence voters in Oklahoma.

“We strive to keep our interest owners informed and believe in being as transparent as possible. This mailer is fact-based and does not express advocacy as it does not ask interest owners to take action,” the company said “Lawmakers increased taxes on production across the board – and raised taxes on every interest owner in every town in Oklahoma. We must withhold and pay those production taxes on behalf of royalty owners at the same rate companies are taxed. Royalty owners should know why their withholdings increased. They obviously can make up their own minds about the vote.”

Oklahoma previously taxed new oil and gas wells at a discounted 2 percent rate for the first three years of production. The landmark revenue raising measure House Bill 1010xx raised that rate to 5 percent in order to increase funding for common education and give teachers an average $6,000 pay raise.

After three years, the wells will be taxed at the state’s basic rate of 7 percent.

The new tax rate went into effect July 1.

Newfield is a publicly traded oil and gas exploration company with assets valued at $646 million and a market capitalization of about $5.9 billion.

Newfield Exploration’s production areas in the United States.

The company’s sizable holdings in the Anadarko and Arkoma basins in Western and Southeastern Oklahoma make up the largest producing area of its portfolio.

Newfield closed its Tulsa office in 2016, affecting about 200 jobs. Most of those jobs were relocated to the company’s headquarters in The Woodlands, Texas.

The Oklahoma Energy Producers Alliance was critical of Newfield’s letter in a response addressed to state legislative leaders.

“We find this “after the fact attack” very unfortunate and not productive for the oil and gas industry. How can it be viewed as anything other than punishing those legislators who had the courage to step up and provide a funding stream to address teacher pay?,” the trade organization said. “For what purpose? To teach those legislators a lesson? To keep them from voting for any future taxes?”

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Brianna Bailey

Brianna Bailey grew up in Idaho. Oklahoma is her adopted home. Bailey has covered issues ranging from Oklahoma's strained child welfare system to the slow decline of Oklahoma's rural hospitals. She has walked all the way across Oklahoma City twice, once north-to south via Western Avenue and once via the old U.S. Route 66. Her hobbies are baking and crashing meetings she isn't invited to attend. She holds a bachelor's degree in journalism from The University of Oklahoma. Email her at brianna@readfrontier.com
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