ARM 42.21.138. OIL AND GAS FIELD MACHINERY AND EQUIPMENT

(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.