(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 2009.

  

OIL AND GAS FIELD PRODUCTION EQUIPMENT TRENDED DEPRECIATION SCHEDULE

YEAR NEW/		TREND	TRENDED
ACQUIRED	% GOOD	FACTOR	% GOOD
2009	100%	1.000	100%
2008	95%	1.000	95%
2007	90%	1.033	93%
2006	85%	1.094	93%
2005	79%	1.149	91%
2004	73%	1.247	91%
2003	68%	1.291	88%
2002	62%	1.317	82%
2001	55%	1.324	73%
2000	49%	1.336	65%
1999	43%	1.358	58%
1998	37%	1.365	50%
1997	31%	1.379	43%
1996	26%	1.396	36%
1995	23%	1.424	33%
1994 and older	20%	1.476	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, 2008.