HB3159

HB3159 offers a capped state oil-and-gas production-tax exemption for qualifying previously inactive wells brought back into production through restimulation. Restimulation means applying pressurized fluid to initiate or extend fractures in the target formation to improve production. The exemption is not for every refractured well. Final law.

A well must have at least 60 months of reported production before treatment and must be inactive immediately before treatment. The referenced definition of inactive means an unplugged well with no reported production, disposal, injection or other permitted activity for more than 12 months. Enhanced oil-recovery projects and drilled-but-uncompleted wells without a production record are excluded. Inactive-well and enhanced-recovery definitions.

Relief ends at the earlier of two limits: the last day of the 36th consecutive month after the month of first post-treatment production, or when combined exempt taxes and the act’s tax credits reach the lesser of qualifying treatment costs or $750,000. Months continue to count even when the well produces nothing. The time limit is tied to first production after treatment—not simply the treatment date or 36 producing months. This is tax relief, not an automatic $750,000 cash grant.

The operator must obtain Railroad Commission certification, and the taxpayer must separately apply to the comptroller with that certificate and a report of current, contemporaneous treatment costs. The commission can revoke an improper certification, ending eligibility for later production unless a new certificate is issued. Gas cannot simultaneously receive this exemption and the high-cost-gas reduction under Tax Code 201.057.

Taxes paid on qualifying production on or after certification but before comptroller approval can qualify for a credit, subject to the applicable refund-claim deadline. The credit counts toward the same cap. The act does not promise a credit for every earlier month of production. Refund-claim rule.

Knowingly applying for relief for a nonqualifying well can bring a civil penalty of up to $10,000 plus the tax difference specified in the act; the attorney general may sue in Travis County. Knowingly submitting materially false information also invokes existing Natural Resources Code penalties. The new civil amount is therefore not a blanket ceiling on every possible consequence.

The governor signed June 20, 2025. The act took effect January 1, 2026, and applies only to hydrocarbons produced on or after that date. Earlier tax liabilities and their enforcement remain governed by former law. Official history.