(Reuters) - The clock kept ticking in March on a potential $5.3 billion, two-year tax break for North Dakota’s oil industry after a state-calculated average of the month’s crude price fell below $52.59 per barrel.
The state waives its 6.5 percent oil extraction tax if the monthly price of benchmark West Texas Intermediate (WTI) crude at the Cushing, Oklahoma, transport hub falls below an inflation-adjusted limit, set at $52.59 per barrel for 2015, for five consecutive months.
For March, the average calculated price was $47.76 per barrel, according to data from the North Dakota tax commissioner’s office. The March average was a drop from the February average of $50.86 per barrel.
The tax break kicks in if the average monthly price is below that $52.59 level for the next two months. If it is off even one month, the clock resets. The tax returns if the average price exceeds that level for a subsequent five consecutive months.
Lynn Helms, head of the state’s Department of Mineral Resources and the state’s main oil regulator, had insisted at the beginning of the year that he didn’t expect the trigger to hit. Last month, though, he changed his mind, saying low oil prices likely would result in the cut.
The countdown, which has officially entered its third month out of a possible five, holds the promise of crucial financial incentive for oil producers and their contractors in the No. 2 oil-producing U.S. state as they grapple with a roughly 50 percent drop in crude prices since last summer.
Reporting by Ernest Scheyder; Editing by Chizu Nomiyama