Were mud-logging services taxable in Texas?

Plain-English summary

Texas did not tax mud-logging services as defined in the letter. The service recorded information from examining and analyzing formation cuttings produced by the drill bit and mud circulated out of the well.

The described work also diverted part of the mud through a gas-detection device and examined it under ultraviolet light for evidence of oil or gas, often from a portable laboratory at the wellsite.

Common questions

Was the described mud logging taxable? No.

What work did the answer cover? Analysis of drill cuttings and circulated mud for oil-and-gas indications under the definition quoted in the ruling.

Would different services necessarily receive the same result? No. The letter limited its opinion to the facts presented.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8905L0936F13

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

May 22, 1989

Dear ***:

Thank you for your letter of May 12, 1989, concerning the taxability of
mud logging services.

Mud logging services as defined in ***, published by The
University **, are not taxable. The definition of mud logging is:

The recording of information derived from examination and analysis of
formation cuttings made by the bit and mud circulated out of the hole. A
portion of the mud is diverted through a gas-detecting device and examined
under ultraviolet light to detect the presence of oil or gas. Mud logging is
often carried out in a portable laboratory set up at the well.

This opinion is based on the facts presented. If there are additional or
different facts, the opinion may change.

If you have any questions or need more information, please call our
toll-free number
1-800-252-5555. The regular number is 512/463-4600. You may write me at
Tax Correspondence, Comptroller of Public Accounts.

Sincerely,
Julie Pesl
Tax Correspondence