Effective from 1 July 2015, House Bill 2562 offers initial low tax rate on oil and natural gas production from all new wells drilled.

Production from all new wells will be taxed at 2% for 36 months, after which the companies will receive gross production tax rate of 7%, as per the incentive.

The initial lower rate would support increased drilling and energy production in Oklahoma.

Fallin said that the energy industry is leading the economic growth and is creating jobs in Oklahoma.

"The new 2 percent tax rate is fair to the state and sends a clear message to energy producers worldwide: Oklahoma is the place for energy production and investment," Fallin added.

The Oklahoma Department of Commerce estimates that energy industry is supporting 25% of all Oklahoma jobs directly or indirectly.

HB 2562 will replace the current gross production tax incentives, which are due to expire next year, comprising 1% tax rate for horizontal wells for the first 48 months of production.

"The new policy will also secure state revenue for priorities like education, while continuing to encourage drilling, investment and job creation in Oklahoma."