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 2010. OIL AND GAS FIELD PRODUCTION EQUIPMENT TRENDED DEPRECIATION SCHEDULE YEAR NEW/ ACQUIRED % GOOD TREND FACTOR TRENDED % GOOD 2010 100% 1.000 100% 2009 95% 1.000 95% 2008 90% 1.041 94% 2007 85% 1.088 93% 2006 79% 1.153 91% 2005 73% 1.211 88% 2004 68% 1.314 89% 2003 62% 1.362 84% 2002 55% 1.387 76% 2001 49% 1.394 68% 2000 43% 1.408 61% 1999 37% 1.431 53% 1998 31% 1.438 45% 1997 26% 1.452 38% 1996 23% 1.471 34% 1995 and older 20% 1.500 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, 2009.