California Minerals, L.P. v. County of Kern

This appeal concerns the valuation of oil and gas mineral property interests for the purpose of determining ad valorem taxes. Appellant, California Minerals, L.P., a Texas limited partnership (California Minerals), challenges the enrolled base year value of mineral rights it purchased in nonproducing property. This interest was assessed at the purchase price allocated to that acreage. According to California Minerals, this value should be zero because “proved” oil and gas reserves, as defined by the applicable State Board of Equalization (SBE) rule, have not yet been established.

As discussed below, the taxable value of a real property interest is presumptively the purchase price. California Minerals had the burden of establishing a different value by a preponderance of the evidence and failed to do so. Accordingly, the judgment in favor of respondent, County of Kern (County), on California Minerals’s complaint for refund of taxes will be affirmed.

BACKGROUND

In 1998, Peter Paul Petroleum Company (Peter Paul) purchased the mineral rights in certain properties located in 19 California counties from Chevron U.S.A., Inc. (Chevron). This interest included “all rights,…