The Average North Dakota Oil Well Will Pay Nearly 23% Of Its Profits In State Taxes

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Written By:
Rob Port

Jul 9, 2012
9:29am

Mark Perry has some interesting facts and figures on the average North Dakota oil well taken from the North Dakota Department of Mineral Resources.

There are almost 7,000 wells in the state that will produce an average of 540,000 over an average 29 year lifespan and produce $20 million in profits.

Each well will also pay $2,200,000 in state gross production taxes at 5%, $2,000,000 in state extraction taxes at 6.5% and $385,000 in state sales tax for a total average of $4,585,000 (remember none of this includes federal taxes).

Additionally each well will pay an average of $7.5 million to mineral rights owners, $2.1 million in salaries and wages and $2.3 million in other operating expenses.

Using these figures, that’s a roughly 18% per-well profit margin before the federal government takes their share. Anyone familiar with a profit and loss statement from a business knows that’s not all that large a margin at all.

So much for “greedy big oil.”