(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 2010.

OIL AND GAS FIELD PRODUCTION EQUIPMENT TRENDED DEPRECIATION SCHEDULE
YEAR NEW/ ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2010	100%	1.000	100%
2009	95%	1.000	95%
2008	90%	1.041	94%
2007	85%	1.088	93%
2006	79%	1.153	91%
2005	73%	1.211	88%
2004	68%	1.314	89%
2003	62%	1.362	84%
2002	55%	1.387	76%
2001	49%	1.394	68%
2000	43%	1.408	61%
1999	37%	1.431	53%
1998	31%	1.438	45%
1997	26%	1.452	38%
1996	23%	1.471	34%
1995 and older	20%	1.500	30%

 

(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, 2009.