"Petroleum Accounting: Principles, Procedures & Issues" by D.R. Jennings, J.B. Feiten, H.R. Brock

This book describes petroleum activities and the numerous accounting principles, practices, and procedures employed in petroleum financial reporting.



This book focuses on United States financial accounting and reporting for petroleum exploration and production activities.

Contents
1. AN INTRODUCTION TO THE PETROLEUM INDUSTRY
BASIC TERMS AND CONCEPTS
AN OVERVIEW OF PETROLEUM EXPLORATION AND PRODUCTION.
ACCOUNTING DILEMMAS
HISTORY OF THE PETROLEUM INDUSTRY IN THE UNITED STATES
STATISTICAL HISTORY OF THE PETROLEUM INDUSTRY
2. PETROLEUM ECONOMICS
A FOCUS ON ADDING RESERVE VALUE
PETROLEUM ECONOMICS TODAY FROM A GLOBAL PERSPECTIVE
THE FRAMEWORK FOR U.S. ECONOMICS.
3. ORGANIZATION OF AN E&P COMPANY
EXPLORATION DEPARTMENT.
DRILLING AND PRODUCTION DEPARTMENT
MARKETING DEPARTMENT.
ADMINISTRATIVE DEPARTMENT.
ORGANIZATION OF THE ACCOUNTING FUNCTION
INFORMATION SYSTEMS
GENERAL ACCOUNTING STRUCTURE OF AN INTEGRATED COMPANY
OUTSIDE ORGANIZATIONS
4. ACCOUNTING PRINCIPLES FOR OIL AND GAS PRODUCING ACTIVITIES
HISTORICAL BACKGROUND
CLASSIFICATION OF COSTS INCURRED
CAPITALIZATION OVERVIEW UNDER SUCCESSFUL EFFORTS ACCOUNTING.
OVERVIEW OF AMORTIZATION UNDER SUCCESSFUL EFFORTS ACCOUNTING.
CHART OF ACCOUNTS.
ANALYSIS OF ACCOUNTS FOR SUCCESSFUL EFFORTS ACCOUNTING.
OVERVIEW OF FULL COST ACCOUNTING
OVERVIEW OF INCOME TAX ACCOUNTING
5. GEOLOGICAL AND GEOPHYSICAL EXPLORATION.
THE NATURE OF EXPLORATION COSTS
ORIGIN OF PETROLEUM
MIGRATION AND TRAPPING OF HYDROCARBONS
GEOLOGICAL AND GEOPHYSICAL EXPLORATION METHODS
6. ACCOUNTING FOR EXPLORATION COSTS
ACCOUNTS AND SUBACCOUNTS FOR EXPLORATION EXPENSE
SPECIAL PROBLEM AREAS IN ACCOUNTING FOR EXPLORATION COSTS.
7. UNPROVED PROPERTY ACQUISITION, RETENTION, AND SURRENDER.
THE LEASE CONTRACT.
OPERATING AND NONOPERATING MINERAL INTERESTS
GENERAL LEDGER ACCOUNTS FOR UNPROVED MINERAL INTERESTS
ACCOUNTING FOR UNPROVED MINERAL LEASEHOLD ACQUISITIONS
ACCOUNTING FOR MAINTENANCE AND CARRYING COSTS OF UNPROVED PROPERTIES
ACCOUNTING FOR IMPAIRMENT AND ABANDONMENT OF UNPROVED LEASES
TOP LEASES AND LEASE RENEWALS
TAX TREATMENT OF UNPROVED PROPERTY ACQUISITION, MAINTENANCE, AND ABANDONMENT COSTS
SPECIAL NONOPERATING INTERESTS CREATED OUT OF THE WORKING INTEREST
8. DRILLING AND DEVELOPMENT.
PREPARING FOR DRILLING
DRILLING CONTRACTS
THE DRILLING PROCESS.
COMPLETING THE WELL
DEVELOPMENT OF THE RESERVOIR
WELL COSTS
9. ACCOUNTING FOR COSTS INCURRED IN DRILLING AND EQUIPPING OIL AND GAS PROPERTIES
SUCCESSFUL EFFORTS ACCOUNTING FOR EXPLORATORY WELL COSTS.
FULL COST ACCOUNTING FOR EXPLORATORY WELL COSTS
SUCCESSFUL EFFORTS ACCOUNTING FOR DEVELOPMENT WELL COSTS.
FULL COST ACCOUNTING FOR DEVELOPMENT WELL COSTS
SPECIAL PROBLEMS IN ACCOUNTING FOR DRILLING AND DEVELOPMENT
AFE SYSTEM FOR DRILLING AND DEVELOPMENT
10. ACCOUNTING FOR JOINT OPERATIONS
LEGAL FORMS OF JOINT ACTIVITIES
JOINT VENTURES
JOINT VENTURE AGREEMENTS
THE JOINT OPERATING AGREEMENT (JOA).
ACCOUNTING PROCEDURE PROVISIONS OF JOINT OPERATING AGREEMENTS.
RECORDING JOINT INTEREST TRANSACTIONS
MATERIAL TRANSFERS.
JOINT INTEREST AUDITS
ELECTRONIC DATA INTERCHANGE (EDI)
E-COMMERCE
11. PRODUCTION AND VOLUME MEASUREMENT
PLACING THE WELL ON PRODUCTION
MEASURING VOLUMES OF OIL AND GAS.
GAS PROCESSING
12. MARKETING crude OIL, NATURAL GAS, and NGL
CRUDE OIL MARKETING.
NATURAL GAS MARKETING
NATURAL GAS LIQUIDS MARKETING
13. ACCOUNTING FOR OIL, GAS, AND NGL SALES
INTRODUCTION
SOME GENERAL ISSUES
PRODUCTION TAXES AND AD VALOREM TAXES
ACCOUNTING FOR OIL SALES.
ACCOUNTING FOR NATURAL GAS SALES
ACCOUNTING FOR RESIDUE GAS AND NGL SALES
SPECIAL ROYALTY PROVISIONS
ACCOUNTING FOR REINJECTED GAS
14. GAS IMBALANCES
INTRODUCTION
PIPELINE GAS IMBALANCES
PRODUCER GAS IMBALANCES
15. PRODUCTION COSTS
PRODUCTION COSTS DEFINED
ACCOUNTING FOR PRODUCTION COSTS
16. OIL AND GAS RESERVES.
INTRODUCTION
GENERAL DEFINITIONS AND CATEGORIES
PROVED RESERVE CLASSIFICATIONS.
RESERVE ESTIMATION
17. DEPRECIATION, DEPLETION, AND AMORTIZATION (DD&A) UNDER THE SUCCESSFUL EFFORTS METHOD.
GENERAL PRINCIPLES OF AMORTIZATION
JOINT PRODUCTION OF OIL AND GAS.
18. ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS OVERVIEW
APPLICATION ISSUES
19. THE FULL COST ACCOUNTING METHOD.
THE COST CENTER.
COSTS TO BE CAPITALIZED.
AMORTIZATION OF CAPITALIZED COSTS
INTEREST CAPITALIZATION
LIMITATION ON CAPITALIZED COSTS
MINERAL CONVEYANCES AND PROMOTIONAL ACTIVITIES
20. ASSET RETIREMENT OBLIGATIONS.
REGULATORY AND OPERATIONAL ENVIRONMENT
CURRENT ACCOUNTING.
EXPOSURE DRAFT ON ASSET RETIREMENT OBLIGATIONS
21. ACCOUNTING FOR CONVEYANCES
GENERAL PRINCIPLES OF ACCOUNTING FOR CONVEYANCES.
SALES AND SUBLEASES OF UNPROVED MINERAL INTERESTS
SALES OF PROVED PROPERTIES.
RETIREMENT OF PROVED PROPERTIES
SALES AND ABANDONMENTS UNDER THE FULL COST METHOD
ACQUISITIONS OF E & P PROPERTY.
BUSINESS COMBINATIONS
OVERRIDING ROYALTY CONVEYANCES
GENERAL TAX TREATMENT OF SALES AND LEASES
22. PRODUCTION PAYMENTS AND NET PROFITS INTERESTS
ACCOUNTING BASED ON THE ATTRIBUTES OF OWNERSHIP
PRODUCTION PAYMENTS
NET PROFITS INTEREST
ACCOUNTING RULES FOR OTHER PROPERTY CONVEYANCES
FULL COST ACCOUNTING
TAX ACCOUNTING.
23. FARMOUTS, CARRIED INTERESTS, AND UNITIZATIONS
FARMOUTS.
FREE WELLS.
CARRIED INTERESTS
PROMOTED VS. PROMOTING.
UNITIZATIONS.
CREATION OF JOINT VENTURES.
FULL COST ACCOUNTING
TAX ACCOUNTING.
24. ACCOUNTING FOR PARTNERSHIP INTERESTS
GENERAL PARTNERSHIPS
LIMITED PARTNERSHIPS
TRANSACTIONS BETWEEN THE PARTNER AND THE PARTNERSHIP 1 MASTER LIMITED PARTNERSHIPS
25. ACCOUNTING FOR INTERNATIONAL OPERATIONS
RISKS OF INTERNATIONAL E & P
FORMS OF OPERATION IN A FOREIGN COUNTRY
INTRODUCTION TO FISCAL SYSTEMS.
CONCESSIONS
CONTRACTUAL ARRANGEMENTS
OTHER ACCOUNTING MATTERS UNIQUE TO INTERNATIONAL
OPERATIONS.
MISCELLANEOUS ISSUES
26. BASIC E & P INCOME TAX RULES
OVERVIEW OF U.S. TAX ON OIL AND GAS
THE OIL AND GAS PROPERTY
ECONOMIC INTEREST
LEASEHOLD.
GEOLOGICAL AND GEOPHYSICAL COSTS
DEVELOPMENT COSTS
DEPLETION
SHARING ARRANGEMENTS
LOSS LIMITATIONS
ALTERNATIVE MINMUM TAX.
FORMS OF ORGANIZATION
INCOME TAX CREDITS
27. ACCOUNTING FOR INCOME TAXES
IDENTIFYING TYPES AND AMOUNTS OF TEMPORARY DIFFERENCES.
FRAGMENTING TEMPORARY DIFFERENCES.
MEASURING TAX EFFECTS OF TEMPORARY DIFFERENCES
ASSESSING NEED FOR A VALUATION ALLOWANCE
DETERMINING FINANCIAL STATEMENT PRESENTATION
MAKING FINANCIAL STATEMENT DISCLOSURES
OTHER CONSIDERATIONS
28. NONVALUE DISCLOSURES ABOUT OIL AND GAS PRODUCING ACTIVITIES.
HISTORY OF DISCLOSURE REQUIREMENTS
OVERVIEW OF DISCLOSURES
FAS 69 NONVALUE DISCLOSURES AND RELATED SEC RULES
SPECIAL DISCLOSURES FOR COMPANIES USING FULL COST
OTHER SEC DISCLOSURES REQUIREMENTS
29. VALUE BASED DISCLOSURES
DISCLOSURE RULES.
SMOG COMPUTATION EXAMPLE
COMBINED SMOG DISCLOSURE, FIELD NO. 1 AND FIELD NO. 2, AS OF 12/31/00
YEAR-END PRICING
USEFULNESS OF THE DISCLOSURES
30. VALUATION OF PROVED OIL AND GAS PROPERTIES.
GENERAL VALUATION CONCEPTS
VALUATION METHODS FOR PROVED OIL AND GAS PROPERTIES.
31. OFFSHORE OPERATIONS AND ENHANCED RECOVERY.
OFFSHORE OPERATIONS.
ENHANCED RECOVERY
32. DERIVATIVES AND HEDGE ACCOUNTING
BACKGROUND.
COMMON TYPES OF COMMODITY-BASED DERIVATIVE INSTRUMENTS
USES OF DERIVATIVES IN THE ENERGY INDUSTRY
RISKS ASSOCIATED WITH DERIVATIVES.
ACCOUNTING GUIDANCE.
INTERNAL CONTROLS.
33. RISK MANAGEMENT
RISK
RISK MANAGEMENT - INTERNAL CONTROL AND MORE.
IMPORTANCE OF RISK MANAGEMENT TO THE E&P INDUSTRY
IMPACT OF RISK MANAGEMENT ON PETROLEUM ACCOUNTING.
APPENDIX 1: REGULATION S-X RULE 4-10
APPENDIX 2: SEC STAFF ACCOUNTING BULLETINS, TOPIC 12
APPENDIX 3: FASB CURRENT TEXT SECTION 0I5, OIL AND GAS PRODUCING ACTIVITIES
APPENDIX 4: ILLUSTRATIVE E&P FINANCIAL STATEMENTS AND SUPPLEMENTAL DISCLOSURES.
APPENDIX 5: ILLUSTRATIVE CHART OF ACCOUNTS
APPENDIX 6: MMS LEASING FORM.
APPENDIX 7: TEXAS OFFSHORE LEASING FORM.
APPENDIX 8: ILLUSTRATIVE DAY RATE DRILLING CONTRACT
APPENDIX 9: A.A.P.L. FORM 610-1989
MODEL FORM OPERATING AGREEMENT
APPENDIX 10: COPAS ACCOUNTING PROCEDURE EXHIBIT
APPENDIX 11: OTHER REFERENCE SOURCES.
GLOSSARY
INDEX