(1) Oil and gas field machinery and equipment shall be valued using the cost approach to market value. The taxpayer must provide to the department the acquired cost, the year acquired, and an itemized description of each piece of machinery and equipment. The acquired cost will be trended to current replacement cost and then depreciated according to the schedule mentioned in (2) .

(2) The department shall prepare a 15-year trended depreciation schedule for oil and gas field machinery and equipment. Trend factors and depreciation factors published by "Marshall and Swift Publication Company" will be used to develop the trended depreciation schedules. The trend factors shall be the most recent available from the "Chemical Industry Cost Indexes" listed in the above publication.

(3) The trended depreciation schedule referred to in (1) and (2) is listed below and shall be used for tax year 2007.

 

O IL AND GAS FIELD PRODUCTION

EQUIPMENT TRENDED DEPRECIATION SCHEDULE

YEAR NEW/		TREND	TRENDED
ACQUIRED	% GOOD	FACTOR	% GOOD
2007	100%	1.000	100%
2006	95%	1.000	95%
2005	90%	1.041	94%
2004	85%	1.130	96%
2003	79%	1.169	92%
2002	73%	1.193	87%
2001	68%	1.199	82%
2000	62%	1.211	75%
1999	55%	1.230	68%
1998	49%	1.237	61%
1997	43%	1.249	54%
1996	37%	1.265	47%
1995	31%	1.290	40%
1994	26%	1.338	35%
1993	23%	1.365	31%
1992 and older	20%	1.383	28%

 

(4) All downhole equipment in oil and gas wells is exempt from taxation. Downhole equipment includes:

(a) sucker rods;

(b) tubing;

(c) casing; and

(d) submersible pumps.

(5) Downhole equipment which is not in an oil or gas well shall be taxed as class eight property.

(6) This rule is effective for tax years beginning after December 31, 2006.