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

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1 Chapter 11. Drilling Rigs and Related Equipment 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 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), amended by the Division of Administration, Tax Commission, LR 38: DR - 1 (2012)

2 1103. Drilling Rigs and Related Equipment Tables TABLE 1103.A LAND RIGS DEPTH "0" TO 7,000 FEET 3, ,100 37,400 4, ,100 47,100 5, ,600 52,000 6, ,500 60,200 7, ,800 77,200 DEPTH 8,000 TO 10,000 FEET 8, , ,900 9, , ,000 10,000 1,329, ,400 DEPTH 11,000 TO 15,000 FEET 11,000 1,738, ,800 12,000 2,183, ,500 13,000 2,635, ,300 14,000 3,062, ,400 15,000 3,434, ,200 DR - 2 (2018)

3 DEPTH 16,000 TO 20,000 FEET 16,000 3,721, ,300 17,000 3,899, ,900 18,000 3,948, ,300 19,000 3,862, ,300 20,000 3,641, ,200 DEPTH 21,000 + FEET 21,000 3,303, ,600 25, ,881, ,200 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 (2018)

4 TYPE WATER DEPTH RATING TABLE 1103.B JACK-UPS FAIR MARKET VALUE ASSESSMENT IC FT. $ 54,900,000 $ 8,235, FT. 109,900,000 16,485, FT. and Deeper 219,400,000 32,910,000 IS FT. 16,500,000 2,475, FT. 27,500,000 4,125, FT. and Deeper 33,000,000 4,950,000 MC FT. 5,500, , FT. 11,000,000 1,650, FT. and Deeper 43,900,000 6,585,000 MS FT. 11,500,000 1,725, FT. and Deeper 22,700,000 3,405,000 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 FT. 50,200,000 7,530, ,800 FT. 90,000,000 13,500,000 1,801-2,500 FT. 164,900,000 24,735,000 2,501 FT. and Deeper 517,400,000 77,610,000 DR - 4 (2018)

5 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) be identified by: three (3) years old. b. Significant factors that would UPGRADE the condition can i. a rig manufactured date on the LAT form of less than DR - 5 (2010)

6 Class Mast Engine I 71 X 125M# 71 X 150M# 72' X 125M# 72 X 150M# 75' X 150M# II 96' X 150M# 96' X 180M# 96' X 185M# 96 X 200M# 96' X 205M# 96' X 210M# 96' X 212M# 96' X 215M# III 96' X 240M# 96' X 250M# 96' X 260M# 102' X 215M# IV 102' X 224M# 102' X 250M# 103' X 225M# 103' X 250M# 104' X 250M# 105' X 225M# 105' X 250M# V 105' X 280M# 106' X 250M# 108' X 250M# 108' X 260M# 108' X 268M# 108' X 270M# 108' X 300M# VI 110' X 250M# 110' X 275M# 112' X 300M# 112' X 350M# TABLE 1103.D WELL SERVICE RIGS LAND ONLY (GOOD CONDITION) C-7 50 SERIES 6V71 C SERIES 8V71 C SERIES 8V92 C-15 12V71 C-15 12V71 12V92 C 15 12V71 (2) 8V92 VII 117' X 215M# C-15 (2) 8V92 (2) 12V71 DR - 6 (2017) Fair Market Value (RCNLD) Assessment 105,000 15, ,000 21, ,000 27, ,000 33, ,000 39, ,000 45, ,000 50,300

7 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 36:778 (April 2010), amended by the Division of Administration, Tax Commission, LR 37:1399 (May 2011), LR 38:808 (March 2012), LR 39:495 (March 2013), LR 40:536 (March 2014), LR 41:678 (April 2015), LR 42:748 (May 2016), LR 43:654 (April 2017). DR - 7 (2010)