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 2014. OIL AND GAS FIELD PRODUCTION EQUIPMENT TRENDED DEPRECIATION SCHEDULE YEAR NEW/ ACQUIRED % GOOD TREND FACTOR TRENDED % GOOD 2014 100% 1.000 100% 2013 95% 1.000 95% 2012 90% 1.000 90% 2011 85% 1.027 87% 2010 79% 1.055 83% 2009 73% 1.040 76% 2008 68% 1.077 73% 2007 62% 1.125 70% 2006 55% 1.192 66% 2005 49% 1.252 61% 2004 43% 1.358 58% 2003 37% 1.406 52% 2002 31% 1.434 44% 2001 26% 1.442 37% 2000 23% 1.456 33% 1999 and older 21% 1.479 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, 2013.