Following in the footsteps of the state of Alaska, and the big tax break it gave oil companies, the state of Mississippi is hoping that it, too, can spur more oil and gas development in the state through some tax incentives. The move will reduce severance taxes on oil from 6%, down to 1.8%, starting in July, and will expire in the middle of 2018. The state has also greatly reduced the taxes on electricity used for CO2 extraction.
The move to reduce severance taxes might not have that big of an impact as hoped, because the oil and gas reserves in the state are rather modest in comparison to its western neighbor, Louisiana. The big winner from this move, though, is Denbury Resources (NYSE:DNR). With large CO2 extraction operations used to serve Mississippi and neighboring states, a large break on electricity taxes will give the company a decent cut to expenses.