Eight oil and gas companies

with 38 different property accounts are appealing

their 2019 Sublette County tax assessments,

setting up the County’s Board of Equalization,

comprised of the county’s five commissioners,

for a lengthy hearing process.

All appeals are based on the same objection

as to how property values on equipment depreciated,

which increased values, in some cases

more than 90 percent. The companies want to

use a depreciation schedule similar to that used

by the Internal Revenue Service based on the

equipment’s age – also called a straight-line

approach.

Sublette County Assessor Jeness Saxton

followed guidelines sent by the State Board of

Equalization that direct assessors statewide to

take into consideration maintenance on equipment.

The County Board of Equalization has 30

days to set a hearing, and both parties – in this

case, the nine companies and Saxton – have 30

days to exchange discovery and fact-finding.

The hearing must be concluded and a ruling

made before Oct. 1. Throughout the hearing

process, the Sublette County Attorney represents

the county assessor and is unable to advise

the Board of Equalization.

At a special Tuesday, June 18, meeting of

the County Board of Equalization, members

were advised by Deputy County Clerk Tracey

Hoover that tentative protests include Newpark

Drilling Fluids, LLC., Jonah Gas Gathering,

Ultra Resources, Inc., Omimex Petroleum, Inc.,

Mustang Resources, Inc., Foundation Energy

Management, Urban Oil & Group and HilCorp

Energy.

According to the appeal filed by Jonah, the

company is requesting a value adjustment based

on obsolescence and a 57-percent usage of the

equipment. A chart accompanies the appeal

showing production during 2018 compared to

the potential capacity for maximum production.

The appeal by Ultra states, “The use of effective

age with trending is not allowing proper

depreciation of older equipment.”

In an email exchange between Saxton and

Chad Wallace, with the Tax Advisors Group

for Newpark Drilling Fluids, Inc., Saxton said

the dispute in values is due to the company

using a depreciation floor of 20 percent on older

pieces of equipment.

Saxton cites a memo from the State Board of

Equalization encouraging appraisers statewide

to use effective ages on property.

She refers to a 2017 appeal by Merit Energy

Company, LLC., and a decision by the Park

County Board of Equalization that was upheld

by the State Board of Equalization on Sept. 26,

2018. The Park County Assessor took into account

maintenance on equipment that extends

its useful life. Those investments also increased

the value of that equipment.

She said the Assessor’s Office requested information

from the companies on the effective

life of equipment, but only a few complied.

Personal property manuals give a total life

expectancy on oil and gas field equipment of

14 years, but many companies were stating

15 years remained on their equipment, Saxton

said.

“We were rather surprised,” Saxton said.

“The fact that the remaining life data varied by

line gave this office the belief that the companies

were looking at maintenance schedules,

as requested, and answering based on the best

information available to them.”

She added, “Given all of the data provided

to us, we felt a remaining economic life of five

years was appropriate (and conservative) for

equipment older than nine years.”

In assessing equipment, the assessor added a

nine-year effective age on all equipment older

than nine years that was valued on a 14-year

life, she said.

Despite the exchange, companies failed to

settle any appeals and are now asking the Sublette

County Board of Equalization to reduce

the value of older equipment to the previous

year’s levels.

Before closing the board of equalization’s

meeting, the board members agreed to hire a

hearing administrator who will also serve as

legal representative for the board. They also

agreed to hire a court reporter to preserve the record

in a case that will most likely be appealed

to the State Board of Equalization.

A local attorney was identified as being a

hearing administrator in the past and County

Clerk Carrie Long was advised to contact the

attorney and determine potential dates for hearings.