Marginal Well Credit for 2020 Natural Gas Production Announced
June 2021

The Internal Revenue Service announced June 4, 2021, in Notice 2021-34 that the Marginal Well Production Credit (MWC) for natural gas production from qualifying wells in calendar year 2020 is $0.66 per mcf (thousand cubic feet) for the first 18 mcf of daily production.

The MWC rates for prior years were 2019 production $0.08, 2018 production $0.00, 2017 production $0.51, and 2016 production of $0.14 per mcf for the first 18 mcf of daily production from a marginal well. The credits may be used to offset regular income tax but may not offset alternative minimum tax. Any unused credit in a year is carried back 5 years to obtain refunds. Any remaining unused credits are carried forward up to 20 years to offset future years income tax.
If you have any questions about this announcement or the application of these tax credits, please email Marlin Witt marlin.witt@actcpas.com or call at 304.346.0441 or email Bill Phillips bill.phillips@actcpas.com or call at 304.624.5471.

Arnett Carbis Toothman is committed to staying up to date on issues that will benefit the oil and natural gas industry and those who serve its members.

Oil and Gas Industry Services Group