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 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.