Current through Register Vol. 35, No. 18, September 24, 2024
A.
ACTUAL
PRICE: "Actual price" means the money or other consideration received or
accrued for the product undiminished by adjustments except as provided in
Sections 3.18.6.8 through 3.18.6.10 NMAC. Actual price includes all receipts,
whether the receipt is characterized as a payment for the product, a
reimbursement for tax or other expense, a price adjustment pursuant to Sections
7-29-4.2,
7-30-6,
7-31-6,
and
7-32-6
NMSA 1978, or a payment or reimbursement for services such as sweetening,
dehydration, measurement, compression or gathering. Receipts from take-or-pay
contracts or negotiated contract settlements become part of the actual price to
the extent that such receipts are consideration received for product severed
and sold. "Actual price" also includes insurance proceeds received for stolen
product.
B.
"ARM'S-LENGTH" -
AFFILIATED PERSONS:
(1) "Arm's-length"
means a transaction, contract or agreement that has been arrived at in the
marketplace between independent, nonaffiliated persons with opposing economic
interests regarding that transaction, contract or agreement.
(2) Two persons are affiliated if one of the
persons either directly or indirectly through one or more intermediaries
controls, is controlled by or is under common control with the other person.
Based on the ownership of the voting securities of a person or based on other
forms of ownership:
(a) ownership in excess of
fifty percent constitutes control;
(b) ownership of 10 through 50 percent
creates a presumption of control; and
(c) ownership of less than ten percent
creates a presumption of noncontrol which the department may rebut if it
demonstrates actual or legal control, including the existence of interlocking
directorates.
(3) Two
natural persons are affiliated if related by blood to the third degree or by
marriage. Transactions between relatives are not transactions under
arm's-length contracts.
(4) To be
considered arm's-length for any production month, a contract must meet the
requirements of Subsection 3.18.1.7B NMAC for that production month as well as
when the contract was executed. Two persons are affiliated for any production
month if they are affiliated for any part of that month.
D.
GATHERING: "Gathering" is the
movement of product from the production unit, as that term is defined in
Paragraph 3.18.1.7E(1) NMAC, to a central accumulation point or processing or
treatment point. This version of Subsection 3.18.1.7D NMAC is applicable to
gathering occurring on or after July 15, 1998.
E.
PRODUCTION UNIT:
(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.
(2) For reporting
purposes, the department may designate any of the following as a production
unit:
(a) property subject to an oil and gas
lease on which one or more wells are located;
(b) an area subject to an order for
unitization or communitization;
(c)
an area subject to a producer's division order;
(d) any producing well;
(e) any other place from which products are
severed; or
(f) a proration unit
approved by the oil conservation division of the energy, minerals and natural
resources department.
F.
REASONABLE RATE OF RETURN: A
"reasonable rate of return" is a rate of return which does not exceed the
industrial rate associated with Standard and Poor's BBB monthly average rate,
as published in the Standard and Poor's Bond
Guide, for January of the preceding calendar year.
G.
TRUCKING: "trucking" means
the transportation by truck of product; transportation by any other means, such
as pipeline or railroad, is not trucking.
