TRD Oil & Gas Severance Tax Project Status Report August 23, 2017 Presenters: John Monforte, Acting Secretary, Taxation and Revenue Department Mike Baca, TRD CIO Judy Vigil, Bureau Chief, Oil and Gas Severance Tax Bureau Jan Christine, IT PM TRD Oil and Gas Severance Tax Project

TRD Oil & Gas Severance Tax Project Agenda Background Project Purpose Scope Schedule (FY17-18) Budget (FY17-18) Status OCM – Industry OCM – OSC, SLO, EMNRD Questions

TRD Oil & Gas Severance Tax Project Background November 2015, the System Management Team (SMT) decided due to budgetary constraints to replace ONGARD with two separate systems: TRD Severance Tax, and State Land Office (SLO) Royalty (RAPS). 2016 Legislative session appropriated $10 million for the ONGARD Replacement project. TRD Oil and Gas Severance Tax Project started definition and base configuration activities at the beginning of FY17.

TRD Oil & Gas Severance Tax Project Background 1st Legislative Session 2017: State Land Office requested and was approved to re- appropriate $5 Million of the $10 Million for the overall ONGARD Replacement Project to the Commissioner of Public Lands (SLO).

Purpose of the Project TRD Oil and Gas Severance Tax Project goal is to integrate Oil and Gas Severance Tax into the existing TAP and GenTax infrastructure used by 28 other TRD tax programs.

TRD Oil and Gas Severance Tax Project Scope TRD Project scope was agreed upon by SMT Decision Request #003, signed 11-22-2016, and unchanged by the current events. Inclusion of all TRD Oil and Gas Severance Tax functions into the existing TRD GenTax infrastructure. Provide the ability to add, change, deactivate Oil and Gas Severance Tax Accounts. Provide the ability to create, process, and validate returns, payments and notices for OGT and NGT. Process Oil and Gas distributions Issue Oil and Gas refunds Provide information and access to Discovery to audit Oil and Gas returns.

TRD Schedule

TRD Project Budget Category Description FY17 FY18 TOTAL Staff-Internal (4) TERMs $76,016 324,000 Fast SI contract $870,803 $1,678,845 Consulting Svcs DBA, Backfill, IV&V $22,650 $336,341 HWR\SWR Team PCs, GenTax $9,327 $600,800 Misc. Travel & Facilities $390 $25,000 TRD assumption of FY17 shared and RAPS exp. RAPS PM, RAPS RFP Contract Svcs, Shared IV&V and PM Green Team $334,562 $1,313,748 $2,964,986 $4,278,734

TRD Oil and Gas Severance Tax Project Status STATUS is GREEN The TRD O&G SevTax Project has assumed all common and RAPS FY17 costs into the TRD project budget. Planning, definition, and base configuration are complete. Development and testing are in progress. Bulk data exchange data has already been received from both EMNRD and SLO. Specifications have been drafted that will be incorporated into the MOUs. MOUs are in-progress for bulk data exchanges separately with SLO and EMNRD. Training has commenced. Resource shortages are being mitigated, but must be closely monitored. Budget, schedule and scope are all in target for project completion June 30, 2018. Known\Unknown: Until RAPS project plans are further developed, contingency funds must be held aside for any post-TRD project costs necessary to interface with RAPS.

TRD Oil and Gas Severance Tax Project Organizational Change Management (OCM) - Overall Communications Plan complete. Activities in- progress Stakeholder Analysis and Management Plan complete. Activities in-process. Impact Analysis and Action Planning are continuous until Rollout. As Is and To Be Process Modeling with changes to Roles and Responsibilities – 60% complete and does not impact implementation.

TRD Oil and Gas Severance Tax Project OCM – Oil and Gas Industry Regular Industry focus group meetings and all industry meetings. Approximately 12 organizations participate in focus group. Includes small, medium and large sized participants, based on wells and return filings. Regular all Industry meetings. The all industry distribution list includes around 750 email addresses, representing approximately 500 organizations. 4 all industry calls held to date, attended by an average of 75-80 participants. Industry participants provide feedback and input into PUN and other decisions impacting them Demo provided to industry participants, demo video on website. Currently a survey underway and industry participants will also be involved in testing. Setup a website for information and other updates - http://www.tax.newmexico.gov/severance- tax-project.aspx Lookup link included on ONGARD site for PUN info - http://www.tax.newmexico.gov/ongard-x- ref-for-property-id-and-pool-id.aspx Link to page for information on Testing - http://www.tax.newmexico.gov/testing.aspx Special Outreach Email setup for questions – OilGas.Outreach@state.nm.us that is linked directly to the TRD ticketing system for tracking. Frequently Asked Questions compiled and being regularly updated   Technical specifications provided to Industry (these included input from state stakeholders as well as industry calls) Issued April 7, 2017.

TRD Oil and Gas Severance Tax Project OCM – OSC, SLO, EMNRD Worked closely with TRD, OSC, SLO and EMNRD SMEs on requirement definition, configuration, data conversion, other decisions. Stakeholders from OSC, SLO, EMNRD are included on all Industry meetings Currently working on specifications for data exchange with SLO and EMNRD OCD. MOUs in progress for data exchanges with SLO and EMNRD Ongoing meetings at all levels – Technical, business and Executive. SMT meets monthly to discuss any issues and decisions. When SLO system is implemented, TRD will work closely to accommodate any data exchange or other requests.

Questions ?