Company Claims State Could Realize Millions in Taxes From Equipment

Sunday, March 16th 2003, 12:00 am
By: News On 6

OKLAHOMA CITY (AP) _ A consulting company and some county assessors may have uncovered unreported or underreported oil and gas equipment that could bring $10 million to $100 million in annual tax revenue to Oklahoma.

Visual Lease Services, based in Holdenville, was hired by several county assessors to help locate and assign market values to oil-field equipment in their counties.

The company said it discovered a 60 million cubic feet per day gas plant, 214 miles of pipeline and compression units owned by Duke Energy Field Services in Stephens County. The equipment wasn't on the tax rolls and has a value of about $10.4 million.

In Garfield County, Exxon reported having a relatively small amount of pipeline that it valued at $885,999. A Visual Lease Services survey found an extensive Exxon pipeline system that the county assessor ultimately valued at more than $23 million, company officials said.

Surveyors found that 28 of 45 oil-field companies operating in Canadian County were not reporting property to the assessor, the company said.

"People just shake their heads when I tell them how much money is involved," Gary Mask, one of the owners of Visual Lease Services, told The Sunday Oklahoman.

Mask estimates between $1 billion and $10 billion in unreported or underreported oil and gas equipment is in Oklahoma, and taxes on that equipment could bring $10 million to $100 million a year.

But Mark Andrews, president of K.E. Andrews & Co., believes Mask's estimates are exaggerated.

Andrews' Texas-based tax consulting company handles tax matters for many of the Oklahoma oil-field companies that may have underreported or didn't report the value of their equipment.

"Have they found property that should have been on the tax rolls? Absolutely. There's no question about that," Andrews said. "But that's not where the thrust of this is coming."

Much of the increased tax money that Visual Lease Services claims it can help assessors obtain comes from assigning excessive market values to oil-field equipment, Andrews argues.

Visual Lease Services uses Global Positioning System satellite technology and leg work in identifying and assigning values to oil-field equipment that isn't on the tax rolls.

Mask said his 28 employees are experienced in the appraisal and oil and gas businesses.

By law, oil and gas companies must annually provide county assessors with lists of oil and gas equipment in each assessor's jurisdiction. Many haven't, The Oklahoman reported.

Assessors say others have listed property at a fraction of its market value.

Visual Lease Services started doing oil-field appraisal work for counties six years ago. There are now 20 counties seeking the company's expertise.

In Texas County, Visual Lease Services and the county assessor have succeeded in getting about $81 million worth of omitted oil-field equipment added to the tax rolls over the past four years, Mask said.

"That could be the value of a whole town," he said.

Texaco and J.W. Operating both had large amounts of equipment that had been omitted from tax rolls, Texas County Assessor Thyra Grounds said.

Putting that equipment on the tax rolls for the past four years has boosted tax revenue by $786,000, Grounds said.

Andrews said oil companies are in a tough position if they attempt to fight what they believe are unfair assessments.

"School superintendents need money, and nobody disagrees with that," Andrews said. "So it's a very popular thing."

Denise Heavner, Cleveland County assessor, said assessors aren't out to get anyone.

"We're just concerned that everybody pays their share," Heavner said.

When oil-field companies don't pay their share, schools lose funding. Other property owners also have to pay more on bond issues, assessors said.