Session of 2000
Effective: April 13, 2000
HOUSE BILL No. 2823
An Act relating to property taxation; concerning the valuation of producing gas wells;
amending K.S.A. 79-331 and repealing the existing section.
Be it enacted by the Legislature of the State of Kansas:
Section 1. K.S.A. 79-331 is hereby amended to read as follows: 79-
331. (a) Except as otherwise provided in subsection (b) of this section, in
determining the value of oil and gas leases or properties the appraiser
shall take into consideration the age of the wells, the quality of oil or gas
being produced therefrom, the nearness of the wells to market, the cost
of operation, the character, extent and permanency of the market, the
probable life of the wells, the quantity of oil or gas produced from the
lease or property, the number of wells being operated, and such other
facts as may be known by the appraiser to affect the value of the lease or
Whenever a county board of equalization or the state board of equal-
ization shall make a change in any of the factors or figures used in deter-
eight-eighths (8/8ths) 8/8ths valuation of the production for any
oil or gas lease or property, such change shall apply to the working inter-
est, royalty interest, overriding royalty interest and production payments.
(b) The valuation of the working interest and royalty interest, except
valuation of equipment, of any original base lease or property producing
oil or gas for the first time in economic quantities on and after July 1 of
the calendar year preceding the year in which such property is first as-
sessed shall be determined for the year in which such property is first
assessed by determining the quantity of oil or gas such property would
have produced during the entire year preceding the year in which such
property is first assessed upon the basis of the actual production in such
year and by multiplying the income and expenses that would have been
attributable to such property at such production level, excluding equip-
ment valuation thereof, if it had actually produced said entire year pre-
ceding the year in which such property is first assessed by sixty percent
(c) The provisions of subsection (b) of this section shall not apply in
the case of any production from any direct offset well or any subsequent
well on the same lease.
(d) In order to clarify and express the intent of the legislature re-
garding the methodology utilized in the determination of fair market value
of producing oil and gas leases for property tax purposes, it is hereby
declared that the primary and predominant consideration in such deter-
mination is, has been and shall be the actual value of oil and gas produc-
tion severed from the earth.
Sec. 2. K.S.A. 79-331 is hereby repealed.
Sec. 3. This act shall take effect and be in force from and after its
publication in the Kansas register.