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 2012. OIL AND GAS FIELD PRODUCTION EQUIPMENT TRENDED DEPRECIATION SCHEDULE YEAR NEW/ ACQUIRED % GOOD TREND FACTOR TRENDED % GOOD 2012 100% 1.000 100% 2011 95% 1.000 95% 2010 90% 1.021 92% 2009 85% 1.006 86% 2008 79% 1.042 82% 2007 73% 1.089 79% 2006 68% 1.153 78% 2005 62% 1.211 75% 2004 55% 1.314 72% 2003 49% 1.360 67% 2002 43% 1.387 60% 2001 37% 1.395 52% 2000 31% 1.408 44% 1999 26% 1.431 37% 1998 23% 1.438 33% 1997 and older 20% 1.453 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, 2011.