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 2008. O IL AND GAS FIELD PRODUCTION EQUIPMENT TRENDED DEPRECIATION SCHEDULE YEAR NEW/ TREND TRENDED ACQUIRED % GOOD FACTOR % GOOD 2008 100% 1.000 100% 2007 95% 1.000 95% 2006 90% 1.053 95% 2005 85% 1.106 94% 2004 79% 1.200 95% 2003 73% 1.242 91% 2002 68% 1.267 86% 2001 62% 1.274 79% 2000 55% 1.286 71% 1999 49% 1.307 64% 1998 43% 1.313 56% 1997 37% 1.327 49% 1996 31% 1.344 42% 1995 26% 1.370 36% 1994 23% 1.421 33% 1993 and older 20% 1.450 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, 2007.