The State Assessed Properties Bureau (SAPB) recently held an outreach/training program for the Oil & Gas Industry. The outreach was held in Albuquerque on 2/20/2018 and Artesia on 2/22/2018.

The outreach was intended to provide clarification regarding proper reporting in the Oil & Gas Industry. More specifically, we covered ad valorem production and production equipment tax (Audit & Compliance Division – Oil & Gas Bureau responsibility) versus property tax (Property Tax Division/County Assessor responsibility). Further, we discussed what type of property is assessed by the State (Property Tax Division – SAPB) compared to what is assessed locally (County Assessors). Reporting instructions and forms were also discussed.

The feedback we received from the outreach was positive, so we decided to put the material on our website for those who were not able to attend the outreach, and for the public. Below are the PowerPoint presentations and other materials covered during the outreach.

ACD Oil & Gas Bureau Presentation:

                ACD O&G presentation

SAPB Presentation & Materials:

               SAPB O&G presentation

The four buckets of taxation for ad valorem production and equipment tax, and property tax for the Oil & Gas Industry.

The following illustration provides an overview of what is taxed via property taxation vs. ad valorem production taxes and what governmental entity (TRD or local assessor) has the responsibility to assess the taxable property. This illustration cannot be substituted for statute – it is meant as a tool to help taxpayers and other interested parties understand property vs ad valorem production and equipment taxes for the Oil & Gas industry. If you have a specific question regarding property taxes, contact the State Assessed Properties Bureau at (505) 827-0895. If you have a specific question regarding ad valorem taxes on production and production equipment, contact the Audit & Compliance Division – Oil & Gas Bureau at or call 866-285-2996 - PRESS OPTION 2

Production Unit Definition

Generally, production unit equipment is taxed on the Ad Valorem side (ACD). Non-production unit equipment taxed on property tax side (State Assessed or Locally Assessed). Below is the definition of a Production Unit per Section 7-32-2 NMSA 1978, Regulation, E. NMAC.

7-32-2. DEFINITIONS.-- As used in the Oil and Gas Ad Valorem Production Tax Act: A. "commission", "department" or "division" means the taxation and revenue department, the secretary of taxation and revenue or any employee of the department exercising authority lawfully delegated to that employee by the secretary; B. "production unit" means a unit of property designated by the department from which products of common ownership are severed;

318.1.7 - DEFINITIONS:


(1) For purposes of determining value with respect to production on or after July

15, 1998, a production unit is the wellhead and the equipment associated with the wellhead. Equipment associated with the wellhead consists of all pipe and equipment supporting separation, dehydration, compression, sweetening, product storage, metering and other activities prior to and including the first place of physical measurement.

          (a) For oil and condensate, the first place of physical measurement is either the outlet of the initial storage facility or the outlet of the lease automatic custody transfer unit.

          (b) For natural gas and carbon dioxide, the first place of physical measurement is the outlet of the custody transfer meter, the allocation meter or the sales meter, whichever occurs first.

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