(a) Principal value of property demonstrated. In the case of a transfer (as defined in §1.613A-7(n)) after December 31, 1974, of an interest in an oil or gas property (as defined in §1.613A-7(p)), the transferee (as defined in section 1.613A-7(o)) shall keep records showing the terms of the transfer, any geological and geophysical data in the possession of the transferee or other exploratory data with respect to the property transferred, and any other information which bears upon the question of whether at the time of the transfer the principal value of the property transferred had been demonstrated by prospecting, exploration, and discovery work.

(b) Production from secondary or tertiary processes. Every taxpayer who claims depletion with respect to oil or gas produced by secondary or tertiary processes (as defined in §1.613A-7(k)) shall keep records of the secondary and tertiary processes applied and maintain records of the amount of production so resulting.

(c) Retention of records. The records required by this section shall be kept at all times available for inspection by authorized Internal Revenue officers or employees, and shall be retained so long as the contents may become material in the administration of any Internal Revenue law.

[T.D. 7487, 42 FR 24264, May 13, 1977]