(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 in the Marshall & Swift Valuation Service Guide will be used to develop the trended depreciation schedules. The trend factors shall be the most recent available.

(3) The trended depreciation schedule referred to in (1) and (2) is listed below and shall be used for tax year 2014.

 

OIL AND GAS FIELD PRODUCTION EQUIPMENT TRENDED DEPRECIATION SCHEDULE

YEAR NEW/ ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2014	100%	1.000	100%
2013	95%	1.000	95%
2012	90%	1.000	90%
2011	85%	1.027	87%
2010	79%	1.055	83%
2009	73%	1.040	76%
2008	68%	1.077	73%
2007	62%	1.125	70%
2006	55%	1.192	66%
2005	49%	1.252	61%
2004	43%	1.358	58%
2003	37%	1.406	52%
2002	31%	1.434	44%
2001	26%	1.442	37%
2000	23%	1.456	33%
1999 and older	21%	1.479	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, 2013.