N.M. Admin. Code § 3.2.124.8
Receipts from the sale of oil, natural gas, liquid hydrocarbon or any combination of these products, including butane and propane, when these products are consumed as fuel in the operation of a "production unit" to lift oil, natural gas, liquid hydrocarbon or any combination thereof from its underground location to the surface, is not the sale of these products to be consumed as fuel in the pipeline transportation of these products. Therefore, receipts from the sale of these products are not exempt from the gross receipts tax pursuant to Section 7-9-36 NMSA 1978. In addition, the use of these products is not exempt from the compensating tax under Section 7-9-37 NMSA 1978. However, the use of these products on the "production unit" on which they were produced is exempt from the provisions of the Gross Receipts and Compensating Tax Act pursuant to Section 7-9-33 NMSA 1978.
N.M. Admin. Code § 3.2.124.8