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Stripper Well/Marginal Property Information

Crude oil produced from oil wells classified as stripper or marginal may use the lower tax rate of 4% of gross cash market value.

Stripper Well Crude Oil Oil produced and sold from a property whose maximum daily average production of crude oil per well during any consecutive 12-month period does not exceed 10 barrels. 
Marginal Property Crude Oil A “property” whose daily average production (excluding condensate recovered in non-associated production) per well during any preceding consecutive 12-month period that did not exceed the number of barrels shown in the following table for the average completion depth. 
 Average Completion Depth in Feet  Barrels Per Day 
 2,000 or more, but less than 4,000  20 or less
 4,000 or more, but less than 6,000  25 or less
 6,000 or more, but less than 8,000  30 or less 
 8,000 or more  35 or less
To receive approval for “Marginal/Stripper” status, provide the Michigan Department of Treasury with the following information:
  • Name, FEIN, and address of producer of wells
  • Name, FEIN, and address of company remitting tax/submitting tax return (if different from producer of wells)
  • Name of the well
  • Permit number and PRU number
  • Well Depth
  • Production figures for 12 consecutive months
  • Verification that well was producing at full capacity
  • Copies of original returns

The Department will review information and respond in writing.

Mail Correspondence to: Michigan Department of Treasury
Bureau of Tax Policy, Severance Tax
P.O. Box 30474
Lansing, MI 48909-7974