Also known as: representative market price · representative field price · market price · field price
Written by attorneys · grounded in primary & secondary sources — see below
The price at which oil or gas is sold in the immediate vicinity of the well. This figure supplies the gross income from the property when calculating a taxpayer's percentage depletion deduction.
Select any source to read its text and confirm it supports the definition.
Rocky Mountain Mining sold crude oil from its well to Riverside Healthcare at the representative market or field price. The taxpayer used that price to determine gross income from the property before applying the percentage depletion deduction limits.
Redline Automotive produced natural gas at the wellhead and recorded the representative market or field price for its depletion computation. The figure established gross income from the property even though the gas was later transported to a distant buyer.
It supplies the gross income from the property by capturing the amount realized from sales in the immediate vicinity of the well before applying percentage depletion limits.
Supporting sources
…royalty for gas from each well where gas only is found, while the same is being sold or used off the premises, one-eighth of the market price at the wells of the amount so sold or used, ... (emphasis added). Gas produced from the Vela leases was sold on the leased premises. The sole standard for calculating royalties was market…