MOUNDSVILLE - The Marshall County Commission agreed Tuesday to lower property assessments for Chesapeake Energy holdings in the county by more than $55 million but rejected a similar request from Chevron Corp., citing a lack of an established two-year earnings history in the county.
Tax assessments for 2013 are based on 2011 earnings information, according to Marshall County Assessor Christopher Kessler.
Attorney John A. Mairs, representing both Chesapeake and Chevron, said Chesapeake's property value assessment for its 29 Marcellus Shale gas wells in the county was initially set at $394,470,554, prompting the company to file an informal protest regarding the assessment with the West Virginia State Tax Department.
Photo by Joselyn King
John A. Mairs, left, a lawyer with the Jackson-Kelly law firm; Kerry Albright, senior property tax representative with the Chevron Services Co.; and Patrick Ryan, production engineer with Chevron, address Marshall County commissioners Tuesday.
The valuation formula is based not only on operating receipts, but on a decline curve determined for each well based on its expected production over time, as well as on actual operating expenses for the tax year, he said.
The state Tax Department found the assessment should be re-evaluated, based on the information submitted. The data was referred to Kessler, who agreed to the department's suggestions, Mairs added.
Cindy Hoover, attorney with the State Tax Department, said the department has now set the working interest portion of Chesapeake's property assessment at $339,909,223 - a difference of $54,561,331.
The royalty interest portion of Chesapeake's property assessment was also reduced by the state agency, she continued. It was originally determined to be $67,774,828, but was amended to $62,862,826 - a difference of $4,912,002.
In total, Chesapeake's property assessments were lowered by $59,473,333.
"It's a fair agreement," Kessler said. "It accurately reflects to Chesapeake where they stand."
"They do have more historical data," he said. "They were one of the original ones to come to the county - so we can look at 2009, 2010 and 2011. It would be a fair agreement to recommend the board accept."
Chevron, meanwhile, purchased 19 wells in the county from AB Resources in 2012. Chevron turned some of the wells off after it was determined they weren't up to adequate safety standards.
Residents sharing in the royalties from these wells recently have been protesting their tax assessments before Marshall County commissioners, noting they are no longer receiving the dividends they did in past years and their property values should be lower.
But Kessler and other county officials consistently have told those residents they only would consider 2011 earning data when determining 2013 tax assessments, and future assessments will reflect any change that occurred with their wells.
Chevron sought Tuesday to use 2012 data as justification for lowering its property assessment, a request that was rejected by both county officials and the state Tax Department attorneys.
"We did not feel there was sufficient data with just one year's production to warrant change, especially when a multitude of wells had been shut in already," Hoover said.
Commissioners, though, did agree to correct Chevron's assessment, based on a clerical error discovered at the State Tax Department. Department attorneys reviewing Chevron's tax assessment protest told commissioners Tuesday they discovered tax information pertaining to Chevron's holdings in the county had been improperly entered at the state level.
Chevron's assessment initially was set at $142,394,309, they reported. The attorneys determined the new assessment figure to be $122,173,820 - a difference of $20,220,489.