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.
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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.