§ 468. Oil and Gas Producing Properties.
18 CA ADC § 468Barclays Official California Code of Regulations
Barclays California Code of Regulations
Title 18. Public Revenues
Division 1. State Board of Equalization--Property Tax (California Department of Tax and Fee Administration -- Timber Yield Tax, See Chapter 11)
Chapter 4. Equalization by State Board
Article 4. Change in Ownership and New Construction
18 CCR § 468
§ 468. Oil and Gas Producing Properties.
(a) The right to remove petroleum and natural gas from the earth is a taxable real property interest. Increases in recoverable amounts of minerals caused by changed physical or economic conditions constitute additions to such a property interest. Reduction in recoverable amounts of minerals caused by production or changes in the expectation of future production capabilities constitute a reduction in the interest. Whether or not physical changes to the system employed in recovering such minerals qualify as new construction shall be determined by reference to Section 463(a).
(b) The market value of an oil and gas mineral property interest is determined by estimating the value of the volumes of proved reserves. Proved reserves are those reserves which geological and engineering information indicate with reasonable certainty to be recoverable in the future, taking into account reasonably projected physical and economic operating conditions. Present and projected economic conditions shall be determined by reference to all economic factors considered by knowledgeable and informed persons engaged in the operation and buying or selling of such properties, e.g., capitalization rates, product prices and operation expenses.
(c) The unique nature of oil and gas property interests requires the application of specialized appraisal techniques designed to satisfy the requirements of Article XIII, Section 1, and Article XIII A, Section 2, of the California Constitution. To this end, the valuation of such properties and other real property associated therewith shall be pursuant to the following principles and procedures:
(1) A base year value (market value) of the property shall be estimated as of lien date 1975 or as of the date a change in ownership occurs subsequent to lien date 1975. Newly constructed improvements and additions in reserves shall be valued as of the lien date of the year for which the roll is being prepared. Improvements removed from the site shall be deducted from taxable value. Base year values shall be determined using factual market data such as prices and expenses ordinarily considered by knowledgeable and informed persons engaged in the operation, buying and selling of oil, gas and other mineral-producing properties and the production therefrom. Once determined, a base year value may be increased no more than two percent per year.
(D) The value of removed reserves shall be calculated by multiplying the volume of the reserves removed in the prior year by the weighted average value, for reserves only, per unit of minerals for all prior base years. The prior year's taxable value of the reserves remaining from prior years shall be found by subtracting the value of removed reserves from the prior year's taxable value.
Credits
Note: Authority cited: Section 15606(c), Government Code, Reference: Article XIII A, Sections 1 and 2, California Constitution.
History
1. New section filed 7-3-78 as an emergency; effective upon filing (Register 78, No. 27).
2. Certificate of Compliance filed 10-2-78 (Register 78, No. 40).
3. Amendment filed 4-2-79 as an emergency; effective upon filing (Register 79, No. 14).
4. Amendment filed 7-2-79 as an emergency; effective upon filing (Register 79, No. 27). Certificate of Compliance included.
5. Change without regulatory effect amending subsections (c)(1) and (c)(5)(A) filed 6-6-2001 pursuant to section 100, title 1, California Code of Regulations (Register 2001, No. 23).
This database is current through 5/10/24 Register 2024, No. 19.
Cal. Admin. Code tit. 18, § 468, 18 CA ADC § 468
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