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 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.