$38
OFFICE OF THE ATTORNEY GENERAL OF 7EXAS
'..
AUSTIN .,.
.~
.~
-o.yuac --~
--
?
I '.
e sands or other
ny suoh oil or
Tcgarardlng
the follow-
p tsksa a contraat fmm the op- :
Z~a well for a stipulated psi06 ‘~
e&500 sadka oz"oeuceint).Bill I.:
"2. There ia a~tool known ah--a'aemmt .. ~'
packer* which is used in ae~entingllners In
v;eu.s. Tibiatool in lmsed or rented to the
owner of the well or contraotor Sor Q ret or
$12 per day operators tlco, plus oar tillaage
to looation a& oporetirts ~XIWUWB. ?iouldtha
mnorable George H..Sheppard,Pade 2 I
party who maelves rent i’prthe ‘paoker*-,be
subjoot to the tax on the rental reoelved or
rental plus expenses 0r the operator?
“3. A mechenlcol perforator 1s used.ln-
stead of a eun perforator. Uylllthe tax apply
for such ssrvlpe? \’
“4. A~idihfng - the oontraotor make8 tViO
* charges to the ‘operatorof a weli; one, la for
the acid used; ths other for the scrvloe rec-
dered. i’Ill1the receipts iron bo+& be taxable?
“5. iiooitraotor take3 a contraot to ‘oleau
out an oil well, part of the work will .consist :
.ofacldizlng or ehootlnh. WI11 the receipts of ‘..I “_
i.
.~the entIN. job be taxable~,’or will’.
thd oontr’aotor‘,,’ .
be .permlttedto meke two separate bllllngs.~and .~ ‘:~
j
tax aocrulng only On aoldlzlng Or'aho+lng serv-
’ Ice?” ‘.
The aimer to soue of .iourquestlois oallsior the ’
dcter&lnatlon6i the neaning of oertaln words used In aone .. .
zieotlonwith a pertloular‘trade,to-wit; the oil and @as
produolngbusiness. iWl6le LO, sub-paragraph1, .Etmlsed
Civil atatutes OS Texas,says;
,
Vhe’ oidl&ry~ 6igaifloatlOns&i1 be s&plied
to word~s,’
exaept words ot art or words connected ‘.
with 6~partloular .tradqor.subjest titter, when
they shall have the sl&nlfioationattaohed to ~. : .’ _‘, ,,
.-thenby eqerta ln~duoh art or trade; with'ref-.
ynce to suoh aubjeot matty.* ” “’
9. 1. .
3% realizethat w13are n& experts ‘in the’oil and +?$spro-
duolng’business, and we hesitate to’plaas a asaning on som ‘.
~.cS~.~ha~trode
words laqolved~in .-a opinion; but It.1s ouz .. ;
duty.to.tiavissyou on :the.Varlous “1ea;al‘questlons
that ocm, ~~‘..
betom you,’agd .ln’oti,lnexp&rtway be wlll~‘prooeodto ado
~o~r’dutti.I~y
antiooerlng
your’quostlonseven thou& we mast as-
certainQk ..,
.teohnlcal
.. trade neanlng of oertaln.word& I
The gartlkular statute in queitloh“1s paragraph
(bg,Seotion $, of %rticle .16,Eouse Eill No. 8, Party-seventh.’
Legislature, which r,aa$s
.a8 hollows: .' .':
xonorableGeorge H. Sheppard, Paga 3
n*(b) Every warson In this State onuamd
In the bu&ass-c? furalchln& any z&iio;j &
parfoming any duty for oth!irsfor a conslbsra-
tion or ooapcnsation,with the use of any de-
doe, tools, inetrumnts or equIpcent,elootrlt.
onl, mechanloal, or othontisa, or by mans of
any ohcmioal.,eleotrloal,or moha~loal pmoeso
when such servioe Is performd In connection
with the oamntlng of the casing seat of arg
oil or gas well or the ahcotinz or ccldizin;:
the formation of auoh wells or tho mrvoying
ortestln~ of the cmds or other formtiona of
the earth of any such.011 or gos GUS, shell
report on the Mth of eaoh month and pay to
the ComptrolJer,at his offloe In Austin, 'i'sxas;
'...~ an oaoupatlon4xx 6qua.Xto tvm and two-tenths,
..
(2.21 pe.roent of the p;ross~ auount risaeivood ..
from asid.servlo.e'fumlshedor duty.perforxmd,
dtiringthe Oalendar month 'next. gamedlAg; The
said report shall bq.erGcuted.under oaC1 on
;mf&~r~~eesorlbcdand.. fur+hsd by the.ConpY
1' ."
'.
_. Tho,key word id_tl& statute,
. _In.-determining
-
tne answers to your questlons, Is mmvice". 'ille
persons
taxed are those persons~~Wfurnishing any ncrvlce or perform-
b&m; uutut.* * . when euoh sorvioe Is parfoaoed in oon-
(1) the aekiting oftthe casing seat of any .,~"I,...
011 or gas .weU'or (2) the'.shootlng or (3) aolU1zin.gthe
fornationsof ruoh wells or (4) the surveying ortesting .
of the sands OT othe~,~.fornatlons oi ~theoarth,la any suah
011 or gas wells", and the tax Is "two anU'.two-tenths (2.2)
per oent.of the gross amount reoalved from said service
i:ethink thle ,lea tax on
~~~l~~;;~fO~d.,
In,arrivlng at anfmera to your' questionswe'want "
to point out that them is a dlstlnotfon betgeen d-*sale" :.
and a %ervloe*. Likewise there Is a dlsticotioa between
the phrase %aterlals iurnl&edw and thenphrase wservloee
iurnished.~ :
2110 IS a now statute, aad thcrofore we are un-
cbleto find any appellate court aaae direotly in point on
thlasituatlon;.butwe do reoelve so&e help from the language
Of casen from other states,oonstruing what constitutes a
..i
f.
honorableGeorge Ii.'
Sheppard, ?age 4
sale as Qlstingulshedfrom a norvlae tithin the meaning
ZTkles tar laws. In the aamiseman v. Gillioz,
192 Ark. 915, 96 I;.E. (2Cl)459, the Suprcse Court of
&icansas held that when a btildinz oontraotor ereoted
a house under an agrarmont by wkiah the aontrautor fur-
nished the material and lcbor for a given EUC It constl-
tuted a S&e Of the meterials, and tiX3!FElrtOf the sum
- wh ic h wa s & $ ven "he materials was subjeat~
In p Qymult oi l
to the sales tax; ana the oourt saia: .':
n mey 8ay he does not sell the houses;
thet hi ~o&struotsor coots them; and that,he
most certainly doos not sell the lime, cement,
lImbor, and stsel whlah he uses and oonsumes in
rabrioatlngthe oompleted struoture whfoh he
ereots upon aad under, the own~r*a rapa.
‘~ WC? Courses one WC&? noi Say that ;th8 :. :
contractor sold'the house, but unquest1onebly ~.
he sells tho materiel that goes into the house. ~,
It.~oaeshould oontraot to'furnish the material.
: ,'..
,~:isnalabor andbuila a'houoe for the owner/he
G0oula neaessarlly estimate or oalpulatet&e
: value or.thamaterial ruinishea and the .owner
'would heve'to pay ror3.t. The aontractorWould
sell this to the owmr. . ."
A 8lmila.rholding was made in the 'aase or.%teenth Street
,InvestxentCorporationv. People, 81 Paa..[Zd) 764, by the ....
supreme court ot Colorado, in whioh the aourt saitl:. .. .~
We cannot, as a oourt,'be'lgnorantor
what all men know: that a aontraot lnvolvlng
lebor and materials which become a constituent
part of axrimprovement,the cnvnershipot whioh -
paeses to the owner of the ma1 estate, in-
volves a transfer or title to the mterials ;
‘~rora considerstion. Thet work and labor is
to be done upon or in oonnection with the mater- .~
ials es an inaident to or in conneotionwith
the transrer of title to the materials, doe6
not rob the trensaotionor its essential char-
aoterlstlcsof a sale ii'the whole or any ..
measurable part of the oonolderntionfor tDs
perrormanaeof the contraot is oompensation
ror the materials. . . ."
:
. . _.
,342
HonomibleGeorge H. Shapgard, Page 5
& exoellantdlsaussion of whhathora transaotion is a sale
or a eervioe or a Mxture 0r both is round in the aasa7
zestem Leather ECFinding Co. V. Stats Tax’Ccainission, 87
Utah 227, 40 Paa. (2d) 526, In whiah tho EuprasloCourt of
Utah held that when a shoe oobrjlerrarairs a pair of shoes
by sewlog”‘newlcathcr on to tfroshoes it constitutes a sale
or the loather and the aobbler’s-ohzrge 1s not made entirely
ror servicee. The Cisoussion In t!xitoas6 .ia 80 excellent
thatwa quota at laneth Srom’it as follows:,
-. . . It the oharge nade rdr regalring -’
shoes oonstitutes a sale by the shoe repairer
to the owner ol the shces or the mtariels used
fn.ths repair jobs, then ena in suuh case under
the express provisions of tho aot the plaI,ntifY
is not liable for the payment or the tez hare
sought.to ba .iap~sodupon it, .+,t ,: 3’ .~ . ._“:
._”_,__
n . The mere iaot that the Xaather and. : 1~‘. .: ..._.>,
other s??tarialshero in question were used to ..
.make.only a part of a shoe.Qoos not ohange tha : __ ‘.
nature of ths .transaotlon.A ‘sale of coeds’ la :
‘definedas .*anagreement whereby the seller
transrors thqrproparty 5.n.goods to the buyer. -:
;.~fora considerationaalled the prloa.* R. S. .: :
Utah 1933, 81-1-l. A sgla 18 in effect so da-
rinea in’the aat hera .involvetL ‘#henashoe’. ’
regafrer dellvors the ‘repair& ehoes to the :‘,
:‘ownerthoreof snd receives yayxent therefor,
the title to the mterlals used in the recalr
lob pasees to the onner. lhe amount Baid ~.
..
‘.*The problem oan ba best approached by
‘nssumfngextreme asses on both ends cl’the &&EI.&.
Ytaena barber shaves a Ferson, the lather and
seep and soothingJotion which go upon the cus-
tomar are mere inoidcntals as oomgarad to the
EonorableGeorge H. Sheppard, Page 0 ;
service pm0rmt3d. It la Ilkewlse~tl-W or shoe
shiners. These Illustrate asses on one enitof
the gmut. Where a nerohant sells readyzcade
clothing and In ooaneatlon therewith iloosal-
terationsand perhaps furnishes rmterlals, suoh
as a rzall pleae of cloth or thread, we have a
case In vihlchtho sorvlcos are izerol~ - lnolde5taI
to the sale. Other oases lie inbetween. The
auto5oblle repair shon furnishes rar,tsas vln as
scrv ocs. ‘iheparts may at thea amount to 5ore
than tha services md other tims vise versa.
SOE~ tr&des hzVs lOag CuStO!Yarily GGparated their
ahorges for aerviaes and parts. The autor2oblle
repair trade lo an exmple. more it Is quite
_’ easy to 5ake the eeparatlon beaause the parts are
usually very deflnlte. In ~the shoe repalrlng
105 theother hand’,the. .practlae’
ltidusttiy, has.,- ,...‘.:
: ‘.
been just the cpposlte. A gross oharge le mada ..%. .~~_
..without separation. Indeec¶,it night be dlffi-
oult to:aake the separatloa ln this trade beoauss ._ ..)
of the alffloulty of d5temfnlng Just.how nuoh ‘_..
leather out fro5 a larger ~pleaegoes into each,
job.* ..(Undersaorlng ours)
0’ther sales tax cases that 5ake similar holdings are Cuslak
’ v. ComonweaIthi 260 Ky. 804, 84 S. XL (zd) 14t Wby v. State
‘iaxOoromlssion, (Ala.) 114 So. 233; iX$sbp P. Johnson, {Calii.)
09 Paa. (2d) .2681 and C, & E, Zkm3hl 0. .v* &es, 373 13.3..
381, 26 IL E. ‘.t2d]~4&3. :_
The only Texas~Ap~ellateao.Wtioaee fram which we
reaeiveany help in decldlng this question is the case or
Stmdard 011 Company or Texas v. State* 342 S. Vi.(26) 519. .~
.~
In that case the uerendant oontended that when automobile
tires,tubes, battories or other aooessorles were installed
on an automobile snd a single oharge rcedePor. the transaatlon
thatsuoh a transmtloa was a %3ervloo* only and not a %81e”
‘80as to mahe .theopsratdl;iji
of the iilllng station where the
transaotlonoaourrea subjeat to tbs “chain store tax”, but
the Court oi Civil AppeaIs held that a “sale” ot said artl-
01estook plaae, and it to evident that the oourt thought
thata part or the sum aharged rapresentedthe sale grloe or ..
the article and the ranala&r represented the oharge for the .
serviceof installing the artiole.
The noun Raervioew l& datined in Kebsterla Eew
InternatlokiLDlotlonary, 2nd Edltloa, as follovmt
#.,.’
.
A!&4
fionorable
George IL Sheppard, Pam 7
flPerfoma?snoe
OS labor for the benefit of
e&thsr, o$ 3t another's ootrzand." ,
.
The foregoin& diotloaary doflnltloh snd appellate
ooufloases show that there io a dlffcronoo between furnish-
1~ a mataria 6na fUnl.5hing a oorwioc. Ye 8x6 oonvinooa
th3t the tax in qUoRtion is a tax on the SGrVicillg Of oil
~cndges welln masured by the gross receipts &rived from
"servicerurnfsheu~ in ce7t3in oil cindgas well oPor3tions;
3ua it is not on the furnishia~ of mtarials to 05.3. and ~35
veils. Therofcrc,a rnrty who acmnts 3 casing seato? en
oil or g35 well for another person, end who furniches the
00mnt for mid o~smtlon, L * sntitlod to deduot the oost of
mid oezent rronihis gross receipts before ooxputinfs the tax.
'.I', : oq anm~r.to. your .. flret question fs ;yes*,~
_._,,....'
,.;. :,;,,,~...("
ve wiil~n6w take up your seoond inquiry, &oh
deal8with the furnishingei a Wo821ent.paoker1*. Since re-
oeivi.ng your request Sor.this .opinlon, you hevo advited us .
that this Wo&xmt packs??*is.“made up with an& form a part ..I
of.theliner berore it is rU into the well on& this tool ..-
ien;ains in thei~11"; and you.also advigql us tAbatthe con-:: '1,~'.
cein turn&shlagthe "cemmt peokeFch3rCes:the owner of
.'. .,
the well ~$22.00 per day operator(8 tins plus oar nileage
totbe location and.' . .. operator's expenses", and that
the operator,~o,tig knetalls the *oezehtpacker' and doe8
~ not hew eny part ,in the aotual bexentlhg operatioa.n
'_
be uncerstana that the "oment paokcr" in question ~~,
ia a devioe or material that is furnished In such a mahner
that It becomes a part of'the ~~11. .Itis lowered into the ::
~011 and used there ,onlyfor the purgose of oemnting the ...:,;
mliner",whioh ia a particular type of shortoasing:at or
near ‘the bottcrm of the well. But, after the liner ia ownted.
the "packer"oamiot be removed. (see uPetroleunPsoduotlone ~~
by WilburF. Cloud, 1931, page 165; 169; "Elements ai the ?ed
trolounIndustry", edited by E. De Golysr,.194Cj pages234i'
and *Perforated.CasinC end Coreen Pipe in Oil bells*,.by IS.
W. &I&y, u. 9. Btieau of iLinesTeohnioel pnper 34y):: _~(
3'0are oonvinoed that the "cement ieckor* in dues-
tlon‘ls3 x3terinl furnished,and that the char@ fcr the
a3m is for mteri32 furnished azd not ?or a ssrvice furnish-
ed. Iiowevarithat &*rt of the ohorge l&t is-or the :
iurnlshlngor the operator is a oharge ror a service, the
serviceor lnstalllng the Woem3nt.paokerW. The hot that
./' ~~ ..
._
w..
a45
DonorableGeorg FL Sheppard,'Page8
part of said olzar&~is based on ocr mileage and part on
operntor'ne-case does not prevent It from being a charge
for a service. A person could hire a day laborer to per-
kind of service at 73.00 par tinypluo his trevel-
sol-9soi?ze
lm expense to and Srom the job each day (20$ ror car fare)
and his eotual expenseswhile on the job (45d for his noon
day lunch), or a person oouXl hire such a laborer for $3.65
per day, the leboror to pay his own traveling expense and
other actual expense1 and, it 13 our opinion that in either
case all oS the monny rocelvcd by theaborer woul& be com-
pensationror oervices furnisha&.
Before giving our answer to your se.oondquestion
.... wa.want.toagain mentl.op,that the tax in question applies
.onlpnhen the servioe is perSormed.inoonneotlon oiithone oi:
sour speoirioallynamed idiland gas well operations, to-wit,
(1) ~oeize~tine;0s the easing seat,* (2) ?shooting,w (3)
"aoSdizin&the Sormations,"ard f4)..Hsurveyi5g or tastln2
of the annilo.* '26have not been given any inSormetion show-
'in2 that Install152a,.:oement.paoker*, or even.oementfng
.a Qnern, is one of the Sour named taxable operations. If ~~ i .._
it Is riotone oS‘tho8e fbur operations the reoeipts there-
rrom are not to be oonsidored in ooi$putingthe tax.
The furnishing OS the Woamsnt Daoker" is the Sur-
nishingOS a material, and the Surnlshing of the operator ‘.
18 a service rurnished. Q\;ranswer to your seoond question
le that &f-the Surnishlng and lnstalll~ or the *oement
paoker"in que8t5.05is one of the Sour taxable operations
named in the statute, the charge Sor furnlshln(Ithe wocmmt
packer"should not be inoluded in the reoeipts on which the
tax Is oonqutcd and the~dharge Sor rurnlshlng the operator
shouldbe inoluded.
.We will now take up your third lnqulry, whloh la
in regard to meohanioal perrorators. %e are adv%sed that
-wperSorati5/fw,
as that term is uoed in the oil and gas pro-.
duoingbuslness,is the operation OS breaking holes through
the walls OS the easing In a well SOr the purpose of making
omnunication into or out oS the earth tcrmatlon et that
particularlevel. (See "Elements of the Petroleum Industryw,
editedby E. De Golyer, 1940, pop3 229) There are two
ordinarymethods or WperSorating",to-mit, "gun p6rSOrati5g'
and %eohenlcel perTorating*. Gun DerSoratine;is rarerred
tG in 'Tundementalsof the Petroleum Industry*, by Dorsey
Bagar,1939, at page 246, as roilma:
. . .
I .
HonorableGeorge H. Sheppard, Page 9
"Gun Perforators.'-k great improvasent
In the teohnique of ooo~pletingwells has re-
sultad frozethe developmentof the gun parfor-
atsr. !Mo devfce firm .45-caliberbullets
through the oaoing, and even through any aen;ent
in back of it, and penetratea through to the
gas or oil zonen.w
The seuo authority at page 247 dloousses zecbanloal perfor-
ati= as folloxs:
wPerforationsnay also be aade by lcwerlng
a cutting tool, oalled a. 'perforatoy, 4 in the ',
hole. ,Ws tool oontWt8 or 8 rolling knife .., i ~.~. ~ '.
.~.
,.
..~,. ..;
toothed whe&l:with out-
whioh fs 'a"eta&'-shtipod' -.-j. :
tfng points; After the'oaring ia perftiated,
the well is b&led to remove the SUM%, sludge, ,-
and drilllog v4atey.e
., YOU questioo.appaxentlyrefers .$othis iast mentioned .-
m&hod. .i_
As heretofore indicated'thetax in quaation ap-
plies only when the aervtioeis performed in oonneotionwith
0~6 0r row ~p~~ifi~'ioaug ne3l0d0s aa gfi8~011 0g0rtiti0ns,
to-wit,(1) *ceplenti% of the o&sing seat", (2) nshootQ&g*, ..:
(3)'*aoidiziugthe fornations*, and (4).%?urveylng'or test-
'ingCJSthe amdam. .~
Aft&
roa%ing your written request for our opln-
ion and tdklr@ you, 'Irro un%arstand you have in mind
with
the question of whether the use of a meohauioal perforator ., '1
aoastltutea"shootfug=.
'We&st give the word ushootingVthe meaning that
~.ie
attaohed~to it la the 011 and gas'produoiag trade. In
"%+rolsun Produotion*,, by Wilbur y. Cloud, 1937, at pages
CC1 and 403$ it sayat:
*Oil well ahaotingdatee baak to the .tine
when Colonel E.k.L. Zobezts exploded eight pounds
of (;u.npo~xke at a depth of 433 feet In the Ladies
bll on Katson Plats near Tittusv5lle, Pehnsyl-
vanla, in Tanuary ; 1865. Durin.c, ths latter
pazt of Yuly, 1866, the Roborta Torpedo Company
~8s granted a patnnt oovsring this process of
increasingoil well prcmu3tion."
EonorableCaorge IL Sheppard, Page 10 :
“At prosont,theream throa types of ox- .’
ploniveauaed ior sh@oting oil wells: liquid
oitroglyoerin,solidiiied nitroglyoerin,nnd
gelatin dynamite. 02 theso the liquid had been
used most; however, the solidifiedform,is sarer
and more vn?iable in ap;licntionSnd resetion."
.wOllwcll shooting is not prectioel in :
all 011 fial15s;but IS sonfined lar.Selyto
wells or nreas that rroduoe from hard, compaot’,‘_ I
close-grainedfxndstoncs and IirceStones.Soft
and unconsolidatedrocks, which are typical of .'
the Gulf Coat area end 6ertnin California,
fields, do.not respond to shooting; and for
that reason shooting is,ra^&er unocnzon.inthose. .;
regions...: .' : .’
. _::,,
_ :
_ ,. : . ‘. ‘:
'i& $ioduotioa’~ay
’ "Sh0&ixig oil .v~el.ls be ” : ..’ .)
done for one of sevorcl reasons: An apparently .. i,
try hole mrryhave b&on drilled, +nd before the: I. '
~011 is abandoned‘someoperators may &et-off,‘a; :’ !’
oharge of nitro~lyoerln-asa linal &tort to- : .‘- . r
vard.'brin(fiag in~sn~oil,~ell. Also, in Some ;.
. ~11s when dril..Jed intotight sands and..krd. :._'~
llms, the reservoir rook maybe 0nly partly~ 'e
..saturated with oil; andvery~Zittlc:gas may be :
present. Jyroquentlythe .shootingof such for- :: F,-:C'. .
.'1xutiona .rdaultS in the completion of-good corn-~;;;,.,;..
~~maroiiloil,xel.la. ylowinffwells era given.
,,,,;~:"
light 'shots*or .nlt.rcSlyceria, blasting ~el,lS....i. ..: '~
',.:
.ars &ivea light *shot6* of nitroglycerin,blast; . ,': ;'~. "~
'-in2g&atin, Or glyoeri.nite, to clean-out the
well and fraoture the sand f'aeo,.thuSprolong-.
ing the period of notural-f'low.,X:tnyold pump-. ".' ',
ing wells are Shot.pf3riodloallytostimulate
drainqe into the well." ;.,
_. .',_
I& wyadamentels of the .Petraleum.Industrg’,.~y‘~,~Y~,Bagari I .:
.1939,at.pa$e 235, it Sayst :
,,.’
.
Whootfng aooomplishes several~purposes,.: .R.' '~".
speoirioally,it ,
“1. iWx&s~up the EMdStOReS or linestones,
oauf3ing~ohennels
to for+
"2. Opens passages to fraotura zones or to
._ _:
j
RcnorableGeorge X. Sheppard, Pace 11
joint planes In whloh oil,may ooour.
"3. rorms a hr&tr WJlleOtiAfZ
area.
“4. Creates nore seepage spaoe in the hole.
.*S.Createe a vacuum that sucks in the Oil,
sturting it through channels iAt. the well.*
xn th oaec of Texas Granite Oil Cospa~y v. Mlliarzs, 199
xy. 146, 250 S. \1.Clc,,the court ~e~t10~ed "ahcotlngWof
IU~ oil well as r0u0w:
"It is a ratter or OOE!!OA'hAo7.'lcdC;e
that
the shooting of an oil oell is done alway at
.. : a tise.wbeA the,well is at or Ae,ar~ooniplet~on,
',-'.'
-otwhen the'05.1sand has beed .rahohedj‘thepur- .' . .:..,"" ~'
pose being.to'loosenthe fornation to,the end
that the f'l~~of 011 znaybe &oreaseg?.W ~~
Ye think that it is appareAt that Wperforating*
..an oiL.wellIs sltogether dlff%rent.from?shootin@ 89 oil
uoll.~Zðer the ~mparfcratiAg*~.lsdmiswlth a *gun per-- ..-
iorator*or.8 %echaniosl parSorator", it'does not come
Vii$hiAthe~eaAi~3 Of %he tcS'a"shooting". Other author- '.
itleethat support this conclusion are as followa: Well-
stootlnG~with Rcterenoe ~toSecorzary Oil Reoovery",by .,
Ii,L!.Ryder, Gil 6:Gas Journal (.Pay 6, 1837) 683 "Zell
'MatmAt after PerforafiAgW,-byB. Bankis, Oil Weekly :'
.(Yaroh28, 193G) 36,.011 & Gas JourAal (Maroh 31% 1938)
176;and "Gun Perforator Utilized in ~Scmfordyoedield for
Conpletlonoi Oll'%~ello~~,by T.P. %&lers, 011 & Gas
Journal(July 33,,1936).53. : ,; ,, i. *
We have @me to aonsiderable~lmgth to show that :
"perioratlAg* Is noteinoludad in the.term nshooti~W, and
that it is not uned in connectionwith aald term, because
we ubdors^&ndthat a COnfUSiOA of thoec terms gave rise to
your question. Io th,eoperation of mperforatinG*ever per-
tomed aa a part of or in oonneotionwith any of the other
taxableoperationer, to-wit, "the o,ene~ntlAg
of the oaslAg
mlt,",*~aoldiziry:the fomatioAs",~or ffsurveyfng or testing
cf the aaAds"? Pro3 our study we hove CGZB to the oo~olusion
thatit crdiaarilp Is not,.but there nay be scxe u~ust.ml
instenceaiA which it is perfomed in oonnectionwlth OAe Of
saidthree operations:, .
.~
&Aorable George fi.~2hepparb.Pa&e 12
Om ansasrto your third question is-that the
tex in question does not apply to the ordinary use of a
9ieohanioalperforator",but It would apply if a vxeohan-
ical p.erSoratoPw3reueed in connectionwith one of the
four taxable operations.
38 will now teke'up your fourth inc,uiry,Miioh
concernsncldiZiA&. IA w~lOZOAtS Of the %Jt~O~SlliB b-
awry*, edited by B. OoGolyor, 1940, p,qe 225, it ~says:
n,:oldizatioA, in the oil iAd.ustry, is
the proocss OS introduoina aoid Into the pore ': (;,.
space of An aoid-solubleproduoina fomatlon
for the purpose of enlargln6 the pm8 by dls- y .... ‘.~.:
’ ‘~ :
.. .. “..
~olvi,~ surroun~r@ $omatlOn and thsr?eby .i.n- ; ~:-:‘t\.’ ,::‘::: :.~
oreasln5 the pez%mabilltpof the *pay* around ~',' ~_,. .+:
the well bore. This n&hod ot enhanoing the ,_ .'
produoiA&ability of certain oil-@educing
strata'appliesprfnulpally to the aoid~soluble
xoservolrrooks, suoh as limstono and dolomite, ._,:
but:oooaeionallyitlo used in.eaad formation. .._;
to dissolve aemnting materials. . iv.
I.
Re believe the sax6 reasoA8 .ayply~inenmerfng .
this questioA that apply .%a answering-ybur Sirat,ijuesti,qn,*~.~ ..,
,.<.,,,
v;SiohOOAOtWA& ,Oanient, As harotoSo?e pointed oqt',there?
Is a differenceb&we&A Surofahing a mtsrlel ad Surnlsh-...~‘~~~~~~“‘.
1~6 a serviae. %e SurAishiAgoS the acid'is the ru33e.h- : :. '.
In& 0s a.materlal. Yhe.tax Is on1y.011the servicing OS
oll'andga8 v@ls, 'and It OaAnot be oaloulatod on the re- *'
ceiptsderived Sron:Suxnishlnfmaterials. Cur answer to
ycur fourth question lo the-at alparty who aoldlzes a well
for another, end'Surnldes the,acid, 18 entitled~todeduot ~~.1;
the cost of said'aoid Srom his~&roee reoeipts beSore 0~: ...,
putlq the tax.
Ze will now take up your fifth i.n@&y, whioh "
conoernscluaniag out (~11old well. A8 we have stated so
Amy times b&ore in this opinion, the tax iA question ap- :.
plieoonly when the servioo Is porforme$tin eoAAeotioAwith
one or the Sour 011 and &as well operations speolfioally
namedaa taxable ~4x1the statute. "Shootfng" is ona of
tIma operations,end Waaldizingw is another, an8 therefore
tha receiptsfrom nshootlAgWInd *aoidizin@ are taxable.
1. '. .,
. i
;
COMMlTl-PI