Laws, Regulations & Annotations

Property Taxes Law Guide – Revision 2017

Property Tax Annotations

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Annotation 790.0160

790.0160 Mineral Properties. A discovery well, an exploratory well that encounters a new and previously unknown mineral deposit, and its proved reserves are subject to supplemental assessment. If newly discovered reserves cannot be produced as a result of the lack of approval by a government agency or the physical inability to produce, the reserves do not meet the definition of proved reserves and should not be assessed until they do. Economic reserves, reserves resulting from enhanced recovery programs, well workovers, recompletions or redrills, or additional reserves resulting from incorrect estimates used for the regular well are not subject to supplemental assessment unless they meet the discovery well test.

New improvement value for development wells, reworks, recompletions or redrills, created as a result of completed new construction, is subject to supplemental assessment provided that the improvement is not classified as a fixture (Revenue and Taxation Code section 75.10(a)). If an appraisal as of the lien date of reserves related to a proposed development well based upon all relevant information available proves inaccurate, no adjustment to the reserves or the value thereof may be made until the next regular roll. And if a well has been abandoned and the structure removed, the improvement value of the well is the only value change recognized for supplemental assessment purposes (Revenue and Taxation Code section 75.10(b)). Any part of the well classified as a fixture cannot be recognized for supplemental assessment purposes and remains on the roll until the next lien date, there is no adjustment for reserves until the next regular roll, and no depletion is allowed on the supplemental roll between the event date and the last assessment. LTA 12/15/1987 (No. 87/100).