OFFICE OF THE AlTORNEY GENERAL OF TEXAS
AUSTIN
Honorable George Xi.Sheppard
Comptrollerof Publia Aaoountrr
Austin, Texas
Dear Sir:
-8evonth L
on the r0ii0dng;
perr0rm the oaring
80 aoi&fxe the forma-
tion at that
son in thlcrState ongaged in the budnor
rurioe or partormi~g kayduty for othenl
(~1'01:
oompenration,dth the nra of any
llefioe,tool8, inetrumentclor equipmenti,slaotrioal,
meahanloal, or atherwlao,or by meaM et q ehemloal
slsatrloal,or meohanlaal p~)oers, I&W! auoh ae%~l6e 18
performed in oonnootionti8h the osla@&tiBg of the oc~ine
seat of any ~$1 or gas well a the rhootl.+gor aoi8ising
the formations of nuoh well8 or the surveying or CastiM
of the samb or other formationa of the Wth in ant muoh
Eonorabla George H. Shoppub, p0ge 2
011 br gas wella, ahall rapport0~1thp 20th 02 saoh lPonth
and pag to the Comptroller,at his ~offioein Austin, Tuaa,
0n ooonpatl6.utu equal to t- md tyo-tsntha (2.2) pa
oant of the grqaa amount rotpite4 rrom aald,srrtioetur-
niahed or datg'periormed,during the oalendar month nut
preoediag. The aald report ahall be ueouted under oath ,I,,
on a form preagrlbed and turnlahed by the Comptroller,*
hel& that wthla la a tu on ~errloe
." (Soa Attorn (hnudL*a Op! liiii
Q.) The psraona~tu0tPare thoar
of the aaaln% art
0
or other iornatlorm of the earth ti w.auoh 011 or
gas wolla."
It.la 0le0r that it 0ny &at& prrioiW:any .ot atid
oprlr~tlona, %owl~, ‘o emuitlng
o r thc.'o*aing la a ,”
~“a h e o tla g,”
%oldlring;w ~~aofceyIcLg* or %~aOinl,l.and oolleetamoney theraror,
8aid~Rpon aa io+fz&+a-& 5 liability i0r the tug ,a@, r, bdleve
it la al.80aleai-that~I? a p0raon prriorma ago other operation,
uhloh oonafltutasa aerv100, that la "in oenneotlanwith" me of
aald named o$e5atlonr auoh lertlor la bk~ao ta.xablo. Ia oth0r
worda,an operatloq,doagnot hara to 30 one or tha, mmed aprratlona
to be taubls,~ but':itii taxeble ii it ii moroll~ *pertorre@h
the ncuaedoporatlona. yha oourta s
oonneotlonwlth*'a broad lntor retiatldh.*
Kokuaai Klaen Kabuahikl Uleha T.~Colunbla Bteyedacr %g 60.~,23
Fed. Supp. 403. We be$lers that any lmlo r ,th t1s perfozmod
aa a neoeaatig atop;toward the prrfomoi of or in fulfillment
OS, a partloular o sratlpm would bs oonaldero&a8 ba$ng dono
ii riaid partioular operation. In the oaae of
'in oonneotlenwit'*
Ra br ld Oorporatlon of Oluater t. Rlahazdaon, (Sup. Ct. of
F&.)'l&lngo. 113, the oourt said:
"In the oam ncRTbeior0ttbe00urt, tha rdtk 0n which
'plaintifiia shuvn to hare be&n employed, and pormlt80d Or
aufrrred to eagags in, waa the proourtient o? a lupplr of
raw materiel for the operation oi.doten~ant~a8awmlJ.l.
That work of that kind la to ba aonatrwd aa work 'a
oonneotlonwith' any nil1 ia fullp a@talnod by the authari-
I ltho &h,0uob work waa note@otually done ia the ril.l
lttyor Gthln the ourt~lla&e theraof,~P .* (Unduaoorlng
t,
i
,EonarablaGaorga H. Shappard, pa&e 3
YOU? firat Question depmda on the moaain~'~ tha
hraaa win oonnootionw1hn.F In Attorney hneral’a Opinion
iiP. 0-36Tt, v, we held that *perrarating,w as that oparatian
la ?rdInarilg one and understood,doaa nofpeonatituta*ahoat 1'
and we also hold in *hat opinion, and wa noW hold, that the 83 '~
in question does not a ply to the ordinary use of a ameaha&aal
pertorator,w bu% that I! t would apply it a Q~aohaniaalperforator*
was used "Id oonaeotlonwith? One of the taxable oparatlona.
X.bda?what was aald in that Opinion, we 'ballerathe aama ao
would apply to *sun ~per?oiNtora* No Pddrratandthat ordiaully
perforatingths aaaing la not d&q In a9nneotlF with a taxabla
o eratlon,but la dona dalg for tha purpose or making hol@:r- la
t Ii
a easing so that the.011 already thera nil1 flow ,lntothe wall1
but, aomatlmaaparSoratIng 1s gone in oonneotionwith a tuabla
operation. (‘See .*Pstrolewa Produotlan,” by Wilbur F. Cloud 1937,
paga 388; WELamanta~ofth,aPotrolawa ladaatr~,*~edltad by i. ~8
Golyar, 1940, page 229;,:-*,Vse of OartiddtifallCoraplationY&Ma,*
by George Webor; O~l~a:Gaa Journal (Maroh 17, 1938); and *Drllllng
Oar Journal
the atatuta. IIIthe aaao you aek about the aarrloo of parforat%ain(r
the oaaipg Ed dqne, as a nrwaaary utop .towardthd pu$armanoo o$
aoldlzfng~tha.~~tlon.~..~,Xn fa,ottha operator had the parioratlng
, ddno In or#or to .qoldlaeeatthat 1~01, and, from what fou have
adrlaad UN, w*,uudrratand that this putloular parfOrmn& j@b
was graparitorp $0 aold~ilng. we think th8 work 8s perforating
the aaalng In this aa8a waa&ne "ln ~oonuaotlon with" aoldlaiag
tha rccmatlon,tiloh Ia,a taxable operatim. Tharofore, our
anawar to your first question Iu that la the partleuhu oaaa
,$ rat,deabribe and ask about the work of psrfaafing tha oulag
'E,. la a taxable aenloe.
Ua wl.ll~now~oonaldar your asa& quadlon,'whIah aan-
i oerna tho use of a gun parrarator in an opa.hole. .Waundaratand
i .~i that the gun pelTorator is lrrere4 iato tha wall to a lava1 balw
.,:- the oaalng and that bullets are tired $nto the farmatlonfor the
purpose of breaking u the sandstone, limaatan~ Or at&r ubatanoe
and opallng paaaagoa sn the f ornation so as to stimulate the flaw
41 011 into the wall.
Aa heretofore IndIaabed,we believe that when l meahml-
oal perforator or a gpn perforator la used ln 108 ordinarymannor,
not In aonneotlonwith a named taxable oporatlon,auoh a aerrioo
la pot taxable. The ordinary wnner of p erating a maohenlaal
perforator or a gun pertarator is to use 9t ln euttlng, pun+rug
of ahootlng holes In a oaalng so that 011 outalda the oaalzq at
Honorably Qeorge H. shoppaml, pago 4
that lore1 aan flow through raid holer into the wall. Wo ara
advised that the use of a gun parSOrator In an opa&??holo
la
very unusual. In Attornaj @aneral'a Opinion Ho. o-3627,
we quoted from Vundamentala of the Petrolsum Industry,*
Dorsey Hager, 1939, at page 235, as SOllows:
"Shooting aooomplIaheaaaveral pur oaaa, apsolflaally,lt
'1. Breaks up the sandstonesar 1L aatone@, oaualng
ohannala to itim.
"2. Opens passages to fracture zones or to joint
plaui)~, in whloh 011 may oaour.
"3. Forma a larger ool.loolsl.ng area.
“4. Creates more seep-e apeoa in the hole.
Ozeates a vaau@mthat suoka l?,the oil, starting
It throz ahanuels into the well.?
In that opinion we duo quoted rraa the oaae of Texas Qamlto Oil
~ompw T. ~illiarrm, 199 ag. ~6, 250 S.W. 818, as rouorar
"It 1s a matter of ooamonknowledge that the ahoot5ag
of 'an oil well la aona alwaia at a tia!ewhen tha wa&l la at
or near oompletlon,or when the oil rand has been ruehad;
tha purpoga being to looaeu the formttlon to tha and that
the flor.or 011 MY be lnoreaamd.w.
We ballera that by the ume of a gun perforator in an op+ hole,
whereby bullets are fired into the formation, It aarrea’t pup-
Tudor the trrau of the statute *ah: lnp
r: Exl~~~:~~:lo. #
Our anawer to four aeoaud qwad ibn 18,
that the firrag or bullota Into tha formatian or M oput hole
at a ~lerelbelow the oaring Is a taxable aerrloa.
We hope that the SoregoIng haa answerad pour quaatlma.
Your0 rorf ~4Aly
ATTORNEY Gl!X.BRAL OF TKXtW
.
APF’ROVED AUG?, 19&l
d) ““ILC;lGl~Zl
,(slgned)GROVER SEILWS
Fir& Assistant Attorney General
APPROVED OPIRION COMMITTEE
By B.C. Ghalrmau
O.K. G.R.D.