Protecting America’s Small Oil and Gas Producers and Rural Jobs Act

1) On May 20, 2026, Senator Roger Marshall (R-KS) introduced S.4604, the Protecting America's Small Oil and Gas Producers and Rural Jobs Act. The bill was read twice and referred to the Committee on Finance. It has two cosponsors (Senators Cassidy and Moran) and is in the early legislative stage. The bill's title emphasizes small producers, but the actual text modifies percentage depletion rules that apply to all oil and gas producers with marginal properties, including large integrated companies. 2) The bill amends Section 613A(c)(6)(C) of the Internal Revenue Code to increase the applicable percentage depletion rate for marginal properties from 15% to up to 25%, based on the reference price of crude oil. It also removes the taxable income limitation on depletion for marginal properties, allowing full deduction regardless of net income. The bill does not authorize any direct spending or appropriations — it is a tax code change that reduces federal revenue by an estimated $500M-$1B annually (based on JCT estimates for similar prior proposals). Actual impact depends on oil prices and production levels. 3) Structural winners are large integrated oil companies with significant US marginal production: ConocoPhillips ($COP), Chevron, and ExxonMobil. These companies have the scale to benefit from the tax change, though the impact is small relative to their overall net income (0.1-1.4% for each). Small independent producers (not publicly traded) are the primary intended beneficiaries but are not represented in the provided ticker universe. The bill does not affect renewable energy companies ($ENPH, $FSLR, $NEE, $GEV) or utilities ($DUK, $SO) as it is specific to oil and gas depletion. 4) No real market data was provided for stock prices. The legislative environment is early-stage with low momentum: the bill has only 3 sponsors (all Republicans), was referred to the Finance Committee, and has no companion bill in the House. Similar bills in prior Congresses (e.g., S. 2601 in the 117th Congress) did not advance beyond committee. The 119th Congress is in its second session (2026), and election-year dynamics reduce the likelihood of major tax legislation passing. 5) Timeline: The bill must pass the Senate Finance Committee, then the full Senate, then the House (or a companion bill), and be signed by the President. Given the early stage, low cosponsor count, and election-year gridlock, the probability of enactment in 2026 is below 10%. If reintroduced in the 120th Congress (2027-2029), prospects could improve with a unified Republican government.