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Lifting cost refers to the cost of producing oil and gas after drilling is complete. Lifting costs includes the following:

1.transportation costs;

2.labor costs;

3.costs of supervision;

4.supplies;

5.costs of operating the pumps;

6.electricity;

7.repairs;

8.depreciation;

9.certain royalties payable to the lessor;

10.other incidental expenses.


The term lifting costs relates to a portion of the cost of producing oil and gas exclusive of drilling and equipping costs. However, the term defies a more precise definition. According to revenue ruling, the term lifting costs is usually considered to be synonymous with operating costs and consists of those deductible costs incurred in the production of oil and gas after completion of drilling and before its removal from the property for sale or transportation.