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

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  • 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

Other programs related to International Accounting

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