Advanced Oil & Gas Accounting; International Petroleum Accounting (1)

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HRODC Postgraduate Training Institute, A Postgraduate-Only Institution

Comments about Advanced Oil & Gas Accounting; International Petroleum Accounting (1) - At the institution - London - Greater London

• Objectives
  By the conclusion of the specified learning and development activities, delegates will be able to:
  
  1. Demonstrate a heightened understanding of the differing levels of Financial Reporting Regulation and Standardization, as they apply to Oil and Gas Accounting;
  
  2. Demonstrate a heightened understanding of salient accounting concepts and governance
  
  3. Demonstrate a heightened understanding of the differing levels of regulation and standardization applied to Oil and Gas accounting;
  
  4. Deconstruct the role of finance and accounting in an Oil and Gas Organisation;
  
  
  5. Exhibit a heightened understanding of the requirements of International Financial Reporting Standards;
  
  6. Demonstrate a heightened ability to analyse their company’s performance, as an oil and gas player or regulator;
  
  
  7. Demonstrate their ability to determine the extent to which financial measurement techniques such as full cost, successful efforts and reserve recognition can be used to evaluate oil and gas producing operations;
  
  
  8. Exhibit their ability to utilise Advanced Financial Measurement Techniques such as full cost, successful efforts and reserve recognition are used to evaluate oil and gas producing operations;
  
  
  9. Exhibit their ability to manage risk effectively in oil and gas project contracts, averting pitfalls of key contractual clauses;
  
  
  10. Demonstrate the most appropriate contract formulation for Take-or-pay thresholds, accounting, transportation agreements, tariffs, reserving pipeline capacity, respectively;
  
  
  11. Determine the roles and interplay of the Governments of territories containing hydrocarbon reserves, National Oil Companies, International Oil Companies, the Major Product Suppliers, the Engineering & Contracting Companies and the Service Companies,
  
  
  12. Suggest the principal standard form contracts used in the industry including the North Sea LOGIC/CRINE standard form contracts and the Association of Independent Petroleum Negotiators (AIPN) standard form contracts;
  
  
  13. Explain the international dispute resolution framework and institutions in the context of expert decisions, mediation arbitration and litigation.
• Practical experience
  Use of Video Cases; Written Cases; Simulations and Industrial Visits.
• Entry requirements
  1st Degree or Equivalent Qualification
• Academic title
  Diploma - Postgraduate in Advanced Oil & Gas Accounting: International Petroleum Accounting (1)
• Course description
  
  
  Day 1 – Accounting Concepts and Governance
  
  General Contents, Concepts and Issues
  
  Accounting Concepts
  
  1. The money measurement concept
  
  2. The entity concept
  
  3. The going concern concept
  
  4. The dual aspect concept
  
  5. The accounting period concept
  
  6. Materiality (Proportionality) concept
  
  7. The conservatism concept
  
  8. Consistency concept
  
  9. The realization concept
  
  10. The matching concept
  
  11. The cost concept
  
  Financial Governance and Standardization Institutions
  
  1. Financial Accounting Standard Board (FASB)
  
  2. The Security and Exchange Commission (SEC).
  
  3.  Accounting Standards Board (ASB)
  
  4. International Accounting Standards Committee (IASC)
  
  5. International Accounting Standards Committee Foundation (IASCF)
  
  6. International Financial Reporting Standards  (IFRS)
  
  7. Industry Specific Oil and Gas Accounting Standards
  
  8.  Generally Acceptable Accounting Principles (GAAP) for Oil and Gas Producing Activities
  
  9. Oil Industry Accounting Committee (OIAC)
  
  
  Day 2 – DRILLING DEVELOPMENT COSTS – SUCCESSFUL EFFORTS
  
  Income tax accounting for drilling costs
  
  IDC vs. Equipment
  
  Intangible Drilling  Costs (IDC)
  
  (1)   Up to an including the installation of Christmas Tree
  
  Prior to Drilling
  
  · G & G
  
  · Preparation of Site
  
  . During Drilling
  
  ·  Drilling contractor’s charges
  
  · Drilling mud, chemicals, cement, supplies
  
  · Fuel
  
  · Wages
  
  · Well testing
  
  

  •  At Target depth and during completion

  
  

  ·  Well testing
  
  ·  Perforating and cementing
  
  ·  Swabbing, acidizing and fracturing
  
  ·  Labour related to the installation of subsurface equipment
  
  ·   Plugging and abandoning cost – for dry wells
  
  (2) After Christmas tree – following completion
  
  

  • Removal of Drilling Rig

  • Restoration of land and damages paid to surface owner

  
  (3)   Wells other than Exploration and development Wells
  
  ·  Intangible costs for extending well (see lists 1 & 2, above)
  
  ·  Intangible costs incurred in drilling water supply and injection wells
  
  ·  Intangible costs incurred in drilling water and injection – where water well is being used to for exploration and development well or for injection.
  
  Financial accounting for drilling and development costs
  
  Well classification
  
  Exploratory well
  
  Service well
  
  Stratigraphic test well
  
  Proved developed oil and gas reserves
  
  Proved undeveloped reserves
  
  Successful Efforts, exploration costs
  
  Exploratory drilling costs
  
  Development drilling costs
  
  Stratigraphic test wells
  
  AFE’s and drilling contracts
  
  Special drilling operations and problems
  
  (1)    Workovers
  
  (2)    Damaged or lost equipment  and materials
  
  (3)    Fishing and side tracking
  
  (4)   Abandonment of portions of wells
  
  Additional development costs
  
  (1)   Development costs
  
  Costs of gaining access and preparing well location for drilling
  
  Costs of drill and equip development well, development-type Stratigraphic test well
  
  Cost of acquiring , constructing and installing production facilities, e.g. lease
  
  

  • Support equipment and facilities
  • Drilling and development seismic
  • Post-balance sheet events
  • Accounting for suspended well costs
  • Interest capitalization
  • Offshore and international operations
  • Problems
  • And Issues associated with Successful Efforts Accounting for Drilling Development Costs

  
  Day 3 – PROVED PROPERTY COST DISPOSITION – SUCCESSFUL EFFORTS
  
  Costs of Property
  
  Cost of lease and well equipment
  
  Cost disposition through amortization
  
  

  • Reserves owned or entitled to
  • DD&A calculation
  • DD&A on a field-wide basis
  • DD&A when oil and gas reserve are produced jointly
  • Estimated future dismantlement, site restoration, and abandonment costs
  • Exclusion of costs or reserves
  • Depreciation of support  equipment and facilities
  • Cost disposition – nonworking interests
  • Revision of DD&A rates

  
  Cost disposition through abandonment or retirement of proved property
  
  Successful efforts impairment
  
  Problems
  
  Day 4 – FULL COST ACCOUNTING
  
  Principles of Full Cost Oil and Gas Accounting
  
  Disposition of capitalized costs
  
  Inclusion of estimated future development expenditures
  
  Inclusion of estimated future decommissioning costs
  
  Exclusions of costs
  
  Impairment of unproved properties costs
  
  Abandonment of properties
  
  Reclassification of properties
  
  Support equipment and facilities
  
  DDA&A under successful efforts versus full cost
  
  Reserves in place – purchase
  
  Interest capitalization
  
  Limitation on capitalized costs – a ceiling
  
  Asset retirement obligations
  
  Deferred taxes
  
  Income tax effects
  
  Assessment of the ceiling test
  
  SFAS No. 144 and Full Cost Ceiling Cost
  
  Post-balance sheet events and the ceiling test
  
  Problems and Issues associated with Full Cost Accounting
  
  
  Day 5 – ACCOUNTING FOR PRODUCTION ACTIVITIES (1)
  
  Accounting treatment
  
  Cost of production versus inventory
  
  Recognition of inventories
  
  Lower-of-cost-or-market valuation
  
  Accumulation and allocation of costs
  
  Individual production costs
  
  Secondary and Tertiary recovery
  
  Gathering systems
  
  Saltwater disposal systems
  
  Tubular goods
  
  Severance taxes
  
  Day 6 – ACCOUNTING FOR PRODUCTION ACTIVITIES (2)
  
  Production cost statements
  
  Joint interest operations
  
  Decision to complete a well
  
  Project analysis and investment decision making
  
  Payback method
  
  Accounting rate of return
  
  Net present value method
  
  Internal rate of return
  
  Profitability index
  
  Problems and Issues associated with Accounting For Production Activities
  

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