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Chapter 11.

Drilling Rigs and Related Equipment

§1101. Guidelines for Ascertaining the Fair Market Value of Drilling Rigs and
Related Equipment

A. General - The standard for valuation of drilling rigs and related equipment is
fair market value. Assessors are to valuate and assess each drilling rig individually with
the appropriate allowance provided for depreciation and obsolescence where necessary.
The recommended procedures for discovery and valuation of drilling rigs follow.

B. Discovery - Each assessor is to assess those drilling rigs located in his


parish as of January 1, each year. Discovery of drilling rigs operating in a parish is the
responsibility of the parish tax assessor. Personnel of each parish assessor's office
should use a visual survey or other method to establish the name and location of drilling
rigs operating in a particular parish on the first of the year. The Louisiana Tax
Commission will assist the parish assessors by providing them a list of active drilling rigs
by section, township, range and the names of the contractor and operator. The parish
assessor should then contact the drilling contractor to determine if a drilling rig is currently
located on the site. The drilling contractor should then be provided a notification of the
assessor's intent to assess the drilling rig and a copy of LAT Form 13. The drilling
contractor should also be provided a copy of LAT Form 5 on which to record the name
and address of owners of leased equipment and inventories located on the drill site such
as equipment, buildings, cement, etc.

C. Valuation - The valuation standard for drilling rigs and related equipment is
fair market value. Fair market value for drilling rigs and related equipment, when using the
cost approach, is to be achieved through use of the information provided the assessor on
LAT Form 13. The assessor shall take the depth of operating capability or engine rated
horsepower and apply the appropriate assessment of the drilling rig as presented in Table
1103.A, 1103.B, 1103.C or 1103.D, as appropriate.

AUTHORITY NOTE: Promulgated in accordance with R.S. 47:1837 and R.S.


47:2326.
HISTORICAL NOTE: Promulgated by the Department of Revenue and Taxation,
Tax Commission, LR 8:102 (February 1982), amended LR 15:1097 (December 1989), LR
16:1063 (December 1990), LR 22:117 (February 1996), amended by the Department of
Revenue, Tax Commission, LR 24:487 (March 1998).

DR - 1 (1998)
§1103. Drilling Rigs and Related Equipment Tables

TABLE 1103.A
LAND RIGS

DEPTH "0" TO 7,000 FEET


DEPTH (FT.) FAIR MARKET VALUE ASSESSMENT
$ $
3,000 916,500 137,500
4,000 1,013,100 152,000
5,000 1,319,200 197,900
6,000 1,772,200 265,800
7,000 2,317,600 347,600

DEPTH 8,000 TO 10,000 FEET


DEPTH (FT.) FAIR MARKET VALUE ASSESSMENT
$ $
8,000 2,909,000 436,400
9,000 3,508,200 526,200
10,000 4,085,100 612,800

DEPTH 11,000 TO 15,000 FEET


DEPTH (FT.) FAIR MARKET VALUE ASSESSMENT
$ $
11,000 4,617,800 692,700
12,000 5,092,500 763,900
13,000 5,503,400 825,500
14,000 5,853,000 878,000
15,000 6,151,900 922,800

DR - 2 (2010)
DEPTH 16,000 TO 20,000 FEET

DEPTH (FT.) FAIR MARKET VALUE ASSESSMENT


$ $
16,000 6,418,800 962,800
17,000 6,680,400 1,002,100
18,000 6,971,900 1,045,800
19,000 7,336,200 1,100,400
20,000 7,824,500 1,173,700

DEPTH 21,000 + FEET

DEPTH (FT.) FAIR MARKET VALUE ASSESSMENT


$ $
21,000 8,496,400 1,274,500
25,000 + 9,419,200 1,412,900

Barges (Hull)

Assess Barges (Hull) at 25 percent of the assessment for the rig value bracket,
and add this to the proper rig assessment to arrive at total for barge and its drilling rig.

Living quarters are to be assessed on an individual basis.

DR - 3 (2010)
TABLE 1103.B
JACK-UPS
WATER DEPTH FAIR MARKET
TYPE RATING VALUE ASSESSMENT

IC 0-199 FT. $ 50,000,000 $ 7,500,000

200-299 FT. 100,000,000 15,000,000

300- Up FT. 200,000,000 30,000,000

IS 0-199 FT. 15,000,000 2,250,000

200-299 FT. 25,000,000 3,750,000

300- Up FT. 30,000,000 4,500,000

MC 0-199 FT. 5,000,000 750,000

200-299 FT. 10,000,000 1,500,000

300- Up FT. 40,000,000 6,000,000

MS 0-249 FT. 10,500,000 1,575,000

250- Up FT. 20,670,000 3,100,500

IC - INDEPENDENT LEG CANTILEVER


IS - INDEPENDENT LEG SLOT
MC - MAT CANTILEVER
MS - MAT SLOT

TABLE 1103.C
SEMISUBMERSIBLE RIGS
WATER DEPTH RATING FAIR MARKET VALUE ASSESSMENT

$ $

0 - 800 FT. 45,700,000 6,855,000

801 - 1,800 FT. 81,875,000 12,281,300

1,801 - 2,500 FT. 150,000,000 22,500,000

2,501 - Up FT. 200,000,000 30,000,000

DR - 4 (2009)
1. The fair market values and assessed values indicated by the tables
above for drilling rigs are based on the current market (sales) appraisal approach and
not the cost approach.

2. These tables assume complete rigs in good condition. If it is


documented to the assessor that any drilling rig is incomplete or is in less than good
condition, these amounts should be adjusted.

3. Significant variations from the “Good” condition are possible and


must be considered when the drilling rig is valued. These variations in condition are
acknowledged by HADCO in the newsletter pricing. Conditions from “poor” to
“excellent” are priced for all depth ratings. If adjustments are needed, the most recent
HADCO newsletter shall be used to determine the proper adjustment condition.

a. Significant factors that would DOWNGRADE the condition


can be identified by:

i. a detailed estimate and description of substantial


capital repairs needed on the rig and/or rig data sheet verifying the rig is of outdated
technology (mechanical rig or the like)

b. Significant factors that would UPGRADE the condition can


be identified by:

i. a rig manufactured date on the LAT form of less than


three (3) years old.

DR - 5 (2010)
TABLE 1103.D
WELL SERVICE RIGS
LAND ONLY (GOOD CONDITION)

Fair Market
Class Mast Engine Value Assessment

I 72' X 125M# 6V71 218,000 32,700


75' X 150M#
II 96' X 150M# 8V71 270,000 40,500
96' X 180M#
96' X 185M#
96' X 205M#
96' X 210M#
96' X 212M#
96' X 215M#
III 96' X 240M# 8V92 310,000 46,500
96' X 250M#
96' X 260M#
102' X 215M#
IV 102' X 224M# 12V71 340,000 51,000
102' X 250M#
103' X 225M#
103' X 250M#
104' X 250M#
105' X 225M#
105' X 250M#
V 105' X 280M# 12V71 358,000 53,700
106' X 250M# 12V92
108' X 250M#
108' X 260M#
108' X 268M#
108' X 270M#
108' X 300M#
VI 110' X 250M# 12V71 436,000 65,400
110' X 275M# (2) 8V92
112' X 300M#
112' X 350M#
VII 117' X 215M# (2) 8V92 500,000 75,000
(2) 12V71

DR - 6 (2010)
1. The RCNLD values given in the table above for service rigs have
been determined with 60% default depreciation rate. The HADCO data for RCN of
service rigs does not contain a stated condition (excellent, good, fair, etc.) similar to
drilling rigs.

E. Consideration of Obsolescence

1. Functional and/or economic obsolescence is a loss in value of


personal property above and beyond physical deterioration. Functional and/or economic
obsolescence shall be considered in the analysis of fair market value as substantiated
by the taxpayer in writing. Consistent with Louisiana R.S. 47:1957, the assessor may
request additional documentation.

AUTHORITY NOTE: Promulgated in accordance with R.S. 47:1837 and R.S.


47:2323.
HISTORICAL NOTE: Promulgated by the Department of Revenue and Taxation,
Tax Commission, LR 8:102 (February 1982), amended LR 10:939 (November 1984),
LR 12:36 (January 1986), LR 13:188 (March 1987), LR 16:1063 (December 1990), LR
17:1213 (December 1991), LR 22:117 (February 1996), LR 23:205 (February 1997),
amended by the Department of Revenue, Tax Commission, LR 24:487 (March 1998),
LR 25:315 (February 1999), LR 26:508 (March 2000), LR 27:426 (March 2001), LR
28:519 (March 2002), LR 30:488 (March 2004), LR 31:718 (March 2005), LR 32:431
(March 2006), LR 33:493 (March 2007), LR 34:683 (April 2008), LR 35:497 (March
2009), LR 36: (March 2010).

DR - 7 (2010)