Oil & Gas Accounting: The Industry, Revenues, Expenses & Joint Operations Self Study Webinar

To provide auditors and other financial professionals with a general understanding of the oil and gas industry and how accounting works within the confines of the industry. You will learn the different types of oil and gas interests as well as the specifics to feel more comfortable understanding the complex nature of how the industry operates and evolves.

DETAILED LEARNING OBJECTIVES

• Identify the standard volume measurement of a barrel of crude oil

• Recognize the common unit used to measure natural gas

• Recall the approximate BTU content of a barrel of oil

• Identify the primary hydrocarbon component of natural gas

• Explain the basis of the 6:1 natural gas to oil conversion ratio

• Distinguish how the Successful Efforts method accounts for dry holes

• Describe how the Full Cost method treats exploration costs

• Identify how seismic costs are treated under Successful Efforts accounting

• Recognize who typically owns mineral rights in the United States

• Define the characteristics of a paid-up lease

• Explain what “HBP” (Held by Production) means in oil and gas leases

• Classify wells drilled in unproven territories as exploratory

• Differentiate among drilling contract types including day rate contracts

• Define the term “spud date” in drilling operations

• Identify examples of intangible drilling costs (IDCs)

• Identify examples of tangible drilling costs

• Explain the purpose of hydraulic fracturing in increasing permeability

• Differentiate between working interests and royalty interests

• Define an overriding royalty interest (ORRI)

• Identify which JOA exhibit contains accounting procedures

• Describe the operator’s responsibilities under a Joint Operating Agreement

• Recognize that Exhibit C in the JOA allows for joint interest audits

• Explain the purpose of an Authority for Expenditure (AFE)

• Describe how a cash call is recorded by the operator

• Define JIB (Joint Interest Billing) in oil and gas accounting

• Identify the function of a Division Order

• Explain how payments to owners are recorded when revenues are received

• Identify common reasons for suspending revenue distributions

• Recognize that the operator generally files severance and production taxes

• Explain why Joint Operating Agreements are generally outside the scope of ASC 606

• Oil and gas industry: background and current developments
• Methods of Accounting for Oil and Gas properties
  – Full cost
  – Successful efforts
• Finding reserves
• Acquiring oil and gas leases
• Drilling activities
  – Exploration and development
  – Intangible Drilling Costs (IDC)
• Production and costs
  – Production costs
  – Capital expenditures
• Joint operations
• Revenues
  – Distribution
  – Contracts