(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 2011.

OIL AND GAS FIELD PRODUCTION
EQUIPMENT TRENDED DEPRECIATION SCHEDULE

  

YEAR NEW/ ACQUIRED	% GOOD	TREND FACTOR	TRENDED % GOOD
2011	100%	1.000	100%
2010	95%	1.000	95%
2009	90%	0.983	88%
2008	85%	1.017	86%
2007	79%	1.064	84%
2006	73%	1.126	82%
2005	68%	1.183	80%
2004	62%	1.284	80%
2003	55%	1.328	73%
2002	49%	1.355	66%
2001	43%	1.363	59%
2000	37%	1.376	51%
1999	31%	1.398	43%
1998	26%	1.405	37%
1997	23%	1.419	33%
1996 or older	20%	1.437	29%

 

(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, 2010.