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 in the Marshall & Swift Valuation Service Guide will be used to develop the trended depreciation schedules. The trend factors shall be the most recent available. (3) The trended depreciation schedule referred to in (1) and (2) is listed below and shall be used for tax year 2013. OIL AND GAS FIELD PRODUCTION EQUIPMENT TRENDED DEPRECIATION SCHEDULE YEAR NEW/ ACQUIRED % GOOD TREND FACTOR TRENDED % GOOD 2013 100% 1.000 100% 2012 95% 1.000 95% 2011 90% 1.026 92% 2010 85% 1.054 90% 2009 79% 1.039 82% 2008 73% 1.076 79% 2007 68% 1.124 76% 2006 62% 1.191 74% 2005 55% 1.251 69% 2004 49% 1.357 66% 2003 43% 1.404 60% 2002 37% 1.433 53% 2001 31% 1.441 45% 2000 26% 1.454 38% 1999 23% 1.478 34% 1998 and older 20% 1.485 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, 2012.