Section 50IAC1-3-1. Assessment of oil and gas wells, equipment, and royalty interests

   ASSESSMENT OF OIL AND GAS WELLS AS REAL PROPERTY IN ACCORDANCE WITH IC 6-1.1-1-15, 6-1.1-4-12.4 AND 6-1.1-4-12.5. In order to provide for a uniform method of assessment of oil and gas wells, the State Board of Tax Commissioners has prescribed the following procedures.

  The number of barrels of oil in storage shall be valued at the posted price of oil as of the assessment date. The posted price of oil as of the assessment date will be computed by this Board, taking into consideration the tier pricing policy in effect at that time, and issued as an addendum to STB Directive 78-2 [50 IAC 1-2 was repealed filed Dec 7, 1988, 9:35 a.m.: 12 IR 907, eff Mar 1, 1989.]. The price for crude oil will be stated in terms of price per barrel while the price for natural gas will be stated in terms of price per 1,000 cubic feet (MCF) in said Directive.

  Oil on hand at a lease site shall be assessed like any other inventory (to be reported on Form 103 [Form 103, renumbered 50 IAC 4-10-3─50 IAC 4-10-10 by the revisor, was repealed, filed Jan 23, 1980, 2:33 pm: 3 IR 1311]) and shall be computed by multiplying the number of barrels in storage by the price of oil per barrel by .21667. (This results in the same assessed value that would be realized by multiplying the number of barrels by the price of oil, less 35% times 1/3).

  The interests in oil or gas shall be valued at the average daily production times the posted price established by this Board for oil or gas times 365. This value must be divided by 3 to determine the assessed value. For those leases being produced by a secondary recovery method, the “interest in oil assessment” is to be reduced by 1/2, as is indicated on the schedule.

  To further assure uniformity, equipment incidental to and necessary for the production of oil and gas has been defined as an appurtenance to land and is to be assessed to the working interest. The assessed value per producing oil well and assessed valuation per producing gas well will be determined by this Board and issued as an addendum to STB Directive 78-2 [50 IAC 1-2 was repealed filed Dec 7, 1988, 9:35 a.m.: 12 IR 907, eff Mar 1, 1989.] along with the prices to be utilized for the valuation of petroleum products. Equipment not constituting an appurtenance shall be returned by the taxpayer as personal property on Forms 103 and 104 [Forms 103 and 104, renumbered 50 IAC 4-10-3─50 IAC 4-10-10 and 50 IAC 4-10-11 by the revisor were repealed, filed Jan 23, 1980, 2:33 pm: 3 IR 1311], i.e. office equipment, trucks, boats, etc.

  Royalty and overriding royalty interests which bear no part of the expense of a lease have been recognized to have a higher value than the working interests, therefore, to arrive at a total assessed value for these interests a factor of 1.50 is used. This is also indicated on the schedule.

  All information shall be filed on schedules previously prescribed as G&O Form #1 by the State Board of Tax Commissioners or on a similar form conforming thereto. A separate schedule is to be filed for each lease with the township assessor on or before May 15th each year.

  Each schedule shall show the name and address of the operator, the name, township and legal description of the lease, and the name, address and proportionate interest of each taxpayer. (Department of Local Government Finance; Real Property Directive 78-101; filed Jan 30, 1978, 4:09 pm: Rules and Regs. 1979, p. 426)