1. (a) The "market value at the mouth of the well' shall be determined by ascertaining the producer's actual marketing costs and subtracting these costs from the producer's gross cash receipts from the sale of the gas.

2. (b) Marketing costs are those costs incurred by the producer to get the gas from the mouth of the well to the market and shall include the following:

   1. (1) costs for compressing the gas sold;
   2. (2) costs for dehydrating the gas sold;
   3. (3) costs for sweetening the gas sold;
   4. (4) costs for delivering the gas to the purchaser.

3. (c) Marketing costs shall not include the following:

   1. (1) costs incurred in producing the gas;
   2. (2) costs incurred in normal lease separation of the oil or condensate;
   3. (3) insurance premiums on the marketing facility.

4. (d) The marketing costs shall be determined by adding together the following:

   1. (1) a reasonable charge for depreciation of the marketing facility being utilized. If the facility is rented, the actual rental fee shall be used;
   2. (2) a return on the producer-owned investment equal to 6% per annum on the average depreciable balance;
   3. (3) direct or allocated labor associated with the marketing facility;
   4. (4) materials, supplies, maintenance, repairs, and fuel associated with the marketing facility;
   5. (5) Ad valorem taxes paid on the marketing facility.
5. (e) If the facility is used for purposes other than marketing the gas being sold, then the cost shall be allocated accordingly.
6. (f) If the facility is handling gas for outside parties, then the average cost for handling all of the gas shall be applied against the facility owner's gas.
7. (g) The actual cost being charged producers by outside parties for marketing functions may be used for tax purposes provided no other benefit or value accrues to the producer.
8. (h) Producers receiving a cost reimbursement from the gas purchaser shall include the reimbursement in the gross cash receipts and shall be entitled to deduct the actual marketing cost incurred.

Source Note:The provisions of this §3.15 adopted to be effective January 1, 1976.