Indiana Administrative Code › Title 50 - DEPARTMENT OF LOCAL GOVERNMENT FINANCE › Article 1 - GENERAL PROVISIONS › Rule 3 - Directives on Real Property › Section 3-1 - Assessment of oil and gas wells, equipment, and royalty interests

Current through July 10, 2024
Authority: IC 6-1.1-31-1
Affected: IC 6-1.1-1-15; IC 6-1.1-4-12.4
Sec. 1.
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[ 50 IAC 1-2 was repealed filed Dec 7,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				  4-10-3-50 IAC 4-10-10 by the revisor, was repealed, filed Jan 23, 1980, 2:33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.