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Welcome to Fundamentals of International Oil & Gas Accounting

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Title: Welcome to Fundamentals of International Oil & Gas Accounting


1
Welcome to Fundamentals of International Oil
Gas Accounting
Dr. Linda Nichols, CPA Texas Tech
University Course Developer
2
Instructor for this Course
c Linda Nichols
  • D. Larry Crumbley, Ph.D., CPA, CrFA, CFFA, FCPA
  • Louisiana State University
  • Editor, Oil, Gas Energy Quarterly

Energy is the fundamental building block for
modern industrialized economies, the very
lifeblood of developed economies. When it is
available, we take it entirely for granted, like
water flowing tamely from the tap. When
availability fails, our lives are disrupted and
restricted, the veneer of comfort and
accommodation quickly erodes, and economic
activity grinds to a halt. C.E.H. Ross and L.E.
Sloan
3
Class Purpose
c Linda Nichols
  • Overall Learning Objective
  • To provide basic understanding and hands-on
    practice of the accounting concepts involved in
    Oil Gas Accounting on an international basis.
  • To understand the accounting behind the financial
    statements and how your accounting entries roll
    into the financial statements.
  • Competencies Involved
  • Basic level general accounting

4
Module 1 Petroleum Operations and Introduction
to Accounting
c Linda Nichols
  • Overall Objective
  • Provide a high level overview of terms and
    concepts relating to petroleum operations that
    will be discussed in the various accounting
    modules. Introduce successful-efforts and
    full-cost accounting.

5
Petroleum Geology
c Linda Nichols
  • Organic theory
  • Oil is formed from organic matter of marine
    origin deposited with rock particles millions of
    years ago.

5
6
Needed for Reservoir Formation
c Linda Nichols
  • Source rock (remains of land/sea life)
  • Conditions to cause petroleum formation (heat and
    pressure)
  • Porosity or pore space (10 or more) and
    permeability (connectability)
  • Trap structural or stratigraphic

6
7
Steps in Petroleum Production
c Linda Nichols
  • 1 Broad GG reconnaissance work
  • 2 A lease or an option to lease may be obtained
  • 3 Detailed GG work is done to evaluate area of
    interest.
  • 4 Data gathered in steps 1 and 3 are analyzed.
    If results positive, a lease is obtained (if not
    already obtained).
  • 5 Further analysis of available data and possible
    more seismic studies done to select drill site.
  • 6 The well is drilled.
  • 7 Based on data obtained during the drilling
    process (cuttings, well logs, etc), decision made
    on commerciality.
  • 8a Sufficient oil and gas
  • Well completed production started.
  • 8b Insufficient oil and gas
  • Another drill site on the lease is selected,
    or lease abandoned

7
8
Necessary Components of an Oil or Gas Field
c Linda Nichols
  • Source rock
  • Conditions to cause petroleum formation
  • Porosity (10 or more) and permeability
  • Trap structural or stratigraphic

Hydrocarbon System Source rock organic-rich
shale that generates oil and/or gas Migration
hydrocarbons escaping from the source rock and
moving to a reservoir Reservoir sandstone or
limestone rock with (generally) high porosity and
permeability that can hold hydrocarbon
fluids Trap a structure or stratigraphic
discontinuity in the reservoir rock that keeps
buoyant hydrocarbons from migrating all the way
to the surface Seal Impermeable rock
above/around the reservoir that keeps
hydrocarbons from leaking to surface
8
9
Upstream vs. Downstream Operations
c Linda Nichols
  • Upstream All necessary activities to find
    hydrocarbon reserves and bring them to the
    surface.
  • Downstream Refining and marketing.
  • Finding new resevoirs is the name of the
    game.
  • M. Economides and R. Oligney

9
10
Phases of Upstream Operations
c Linda Nichols
  • Initial prospecting
  • Mineral right acquisition
  • Exploration
  • Appraisal
  • Development proved
  • Production
  • Abandonment restoration

10
11
Types of Agreements
c Linda Nichols
  • Concessionary
  • Leases
  • Concession Agreements
  • Contractual
  • Production Sharing Contracts (PSCs)
  • Risk Service Contracts

11
12
Concessionary Agreements
c Linda Nichols
  • In U.S., parts of Canada, and Trinidad,
    individuals may own mineral rights (e.g., lease
    agreement).
  • Some countries allow non-governmental ownership
    of oil/ gas after produced (concessionary
    contract).
  • Lessor (land owner) leases to the lessee
    (operator) the right to explore, develop, and
    operate the oil/ gas.
  • Concessionary contract For up-front bonuses,
    royalties, and taxes, a government transfers
    ownership to the minerals to the petroleum
    company when the minerals are produced or sold.
  • Back-in or Participation Government retains the
    right to participate as a WI owner (e.g., joint
    venture partner) after the results of initial
    exploration and drilling are known.

12
13
Leases Interests Created from Working Interest
c Linda Nichols
  • Joint Working Interest Two or more parties each
    own an undivided fraction of the WI in a single
    lease by 1) leasing, 2) sales or exchanges, or 3)
    sharing arrangements.
  • Overriding Royalty Interest (ORI) Similar to a
    royalty interest. Original lessee executes a
    sublease and retains an overriding royalty
    interest (ORI).
  • Production Payment Interest (PPI) A non-
    operating interest created out of the WI which is
    limited to a specific amount of money, time, or a
    certain quantity of oil or gas. Thus, a PPI
    normally ends before the reservoir is depleted.
  • Net Profits Interest (NPI) Non- operating
    interest created out of the WI by either a
    carve-out or retention.
  • Utilization Agreement between two or more
    parties owning operating interests to have such
    interests operated on a joint basis and share the
    production by a stipulated percentage or
    fractional basis.
  • Pooling Bringing together small tracts
    sufficient for the granting of a well permit
    under state spacing rules.

13
14
c Linda Nichols
Authority for Expenditure
14
15
Contractual System
c Linda Nichols
  • All citizens in the country owns the minerals.
  • Production sharing contract The petroleum
    company is allowed to recover certain costs and
    receive a share of the profits.
  • Risk service contract Contractor bears all costs
    and risks related to exploration, development,
    and production. If production, contractor is
    allowed to recover costs as production is sold.
    Plus the contractor is paid a fee of its
    services.

15
16
Agreement 1 Leases
c Linda Nichols
  • Grants to oil and gas company right and
    obligation to operate on a property
  • Bonus
  • Royalty
  • Lessee responsible for all costs
  • In effect indefinitely with production

16
17
Agreement 2 Concessions
c Linda Nichols
  • Bonus
  • Royalty or in-kind payment
  • Contractor responsible for all costs without
    reimbursement
  • In effect indefinitely with production
  • Ownership of minerals transferred to contractor

17
18
Agreement 3 Production Sharing Contracts
c Linda Nichols
  • Government gets royalty (may be in-kind)
  • Government retains ownership of minerals
  • Contractor responsible for all exploration costs
  • Government (through state oil company) has option
    to become WI owner in development and production
  • Contractor may be required to build country
    infrastructure
  • Bonus
  • Costs are recoverable through cost oil
  • Profit oil divided between government, state oil
    company and contractor
  • Contractor has entitlement interest

18
19
PSCs Accounting Issues
c Linda Nichols
  • May have signature, development, or production
    bonuses
  • Maximum time for production phase results in
    state oil company taking over 100 working
    interest.
  • Cost recovery is capped, often 50 of gross
    production
  • Cost recovery order is specified
  • Operations
  • Unrecovered exploration appraisal
  • Development
  • Imputed interest on development
  • Excess cost oil may be treated as profit oil or
    allocated to the government.

19
20
Types of PSC Bonuses
c Linda Nichols
  • Signature bonus A signing bonus generally a
    lump-sum, but may be in the form of equipment.
  • Production bonus Subsequent payments are made to
    the government when the production reaches an
    agreed upon level.
  • Development bonus Subsequent payments are made
    to the government when development reaches an
    agreed upon level

20
21
PSCs Accounting Issues
c Linda Nichols
  • Overhead usually on sliding scale.
  • Ownership of equipment and facilities passes to
    government.
  • Significant production may go toward payment of
    taxes.
  • In past, state oil company was responsible for
    abandonment and restoration.
  • In current agreements, all parties contribute to
    sinking fund for abandonment and restoration.
    Funded amounts are computed on a
    units-of-production basis.
  • May have domestic market obligation which may
    state a maximum price.
  • Royalty and tax holidays may be granted.
  • Recoverable costs are identified in PSC.

21
22
Agreement 4 Risk Service
c Linda Nichols
  • Bonus
  • Royalty (may be in-kind)
  • Government retains ownership of minerals
  • All costs initially paid by contractor, but
    recoverable from government
  • Government (through state oil company) has option
    to be WI owner in operations

22
23
Risk Service Accounting Issues
c Linda Nichols
  • After contract term, state oil company takes
    over.
  • Ownership of reserves by contractor is not
    permitted.
  • Fee based on operating costs, capital costs, and
    a profit factor.
  • Non-risk service agreements are possible, but are
    rare.

23
24
Reserve Estimation Methods
c Linda Nichols
  • Deterministic results in a single best estimate
    of reserves. SEC requires
  • Probabilistic results in a range of estimates
    with their associated probabilities. Includes
    proven, probable and possible reserves.
  • U.K. firms have choice.

24
25
GAAP for Reserves Definitions
c Linda Nichols
  • US GAAP only proved reserves can be reported.
    They are further classified as developed or
    undeveloped.
  • UK GAAP Permits companies to choose
    reporting using either proved or probable
    reserves (using probabilistic methodology) or
    proved developed and undeveloped reserves (using
    deterministic methodology).

25
26
SECs Definition of Proved Reserves
c Linda Nichols
  • The estimated quantities of crude oil, natural
    gas and natural gas liquids which geological and
    engineering data demonstrate with reasonable
    certainty to be recoverable in future years from
    known reservoirs under existing economic and
    operating conditions, i.e., prices and costs as
    of the date the estimate is made. Prices include
    consideration of changes in existing prices
    provided only by contractual arrangements, but
    not on escalations based upon future conditions.
    . . .
  • SEC Reg. 5-X, Rule 4-10(a)

26
27
Proved Reserves Subdivided
c Linda Nichols
  • Proved developed those proved reserves that can
    be expected to be produced through existing
    equipment and operating methods.
  • Proved undeveloped expected to be produced
    through new wells to be drilled on proved
    property or from existing wells for which
    significant expenditure is required for
    recompletion.

27
28
Probable and Possible Reserves
c Linda Nichols
  • Probable reserves Unproved reserves that are
    more likely than not to be recoverable. Probable
    reserves may become proven with additional
    drilling or with an enhanced recovery project.
    These reserves also may become recoverable if the
    price of oil or gas increases.
  • Possible reserves Unproved reserves that are
    less likely to be recoverable than probable
    reserves.
  • Commercial reserves Based on proved reserves
    only. May, at the companys option, be either
    proven and probable or proved developed and
    proved undeveloped.
  • Statement of Recommended Practice (SORP) 2001,
    Accounting for Oil and Gas Exploration,
    Development, Production and Decommissioning
    Activities, 12.

28
29
Bias Assumptions
c Linda Nichols
  • There are almost as many oil/gas reserve
    definitions as there are countries.
  • During the first week of January 2004, Royal
    Dutch/Shell Group slashed its estimates of oil
    reserves by 20 or about 3.9 billion barrels of
    oil.
  • Stock fell 9.
  • Shell, Exxon/Mobil, and Chevron/Texaco make the
    estimates themselves.
  • By the end of 2002, a total of 4.47 billion
    barrels cut another 1.4 billion barrel cut in
    2003.
  • Source Susan Warren and P.A. Mckay, Methods for
    Citing Oil Reserves Prove Unrefined, Wall Street
    Journal, January 14, 2004, p. C-4. Chip Cummins,
    Shell Slashes Oil Reserves Again, News
    Overshadows Profit Surge, WSJ, February 4, 2005,
    p. A-3

29
30
Shell Board Kept In the Dark
c Linda Nichols
  • One memo drafted on February 11, 2002, warned
    that about one billion barrels of oil-equivalent
    reserves appeared not to be in compliance with
    SEC guidelines.
  • Board learned of information only in early
    January 2004.
  • Chairman Sir Philip was ousted in early March
    2004.
  • Most of the misstated reserves were recorded from
    1997 to 2000, when Sir Philip was in change of
    exploration and production.
  • Oil/gas reserves were increased (not by
    discovery) by changing its accounting.
  • Source Stephen Labaton and Jeff Gerth, At
    Shell, New Accounting and Rosier Oil Outlook,
    New York Times, March 12, 2004, pp. A-1 and C-4.

30
31
Types of Reserves Proved Reserves
c Linda Nichols
  • Proved
  • Proved developed
  • Proved undeveloped

Before property fully developed Proved reserves
proved undeveloped proved developed
After property fully developed Proved reserves
proved developed
31
32
Accounting Standards GAAP
c Linda Nichols
  • US FASB SEC SFAS 19 SFAS 69
  • UK ASB OIAC
  • International IASB
  • IFRS 6 IAS 1

32
33
FASB-IASB Project
  • Improve both U.S. GAAP and IFRS while
    concurrently eliminating many individual
    differences.
  • Currently focused on short-term convergence
    projects.
  • Addresses differences outside the scope of a
    major project
  • Solution achievable in the short-term
  • The SEC is adopting rules to accept foreign
    private issuers financial statements prepared in
    accordance with IFRS without reconciliation to
    U.S. GAAP.

34
Vision 5 Years From Now
  • U.S. public companies will be following IFRS, not
    U.S. GAAP
  • One standard setter (IASB) will promulgate IFRS
  • Still some to-be-determined role for national
    standard setters (such as FASB)

35
Global Standards
c Linda Nichols
  • A single set of high-quality, comprehensive
    accounting standards involves the convergence of
  • Auditing standards
  • Capital markets regulation
  • Audit oversight
  • Changes in the U.S. and legal environment

36
Four Types of Costs
c Linda Nichols
  • Acquisition Costs
  • Exploration costs
  • Development costs
  • Production costs

36
37
Some Acquisition Costs
c Linda Nichols
  • Signing bonus upfront monies to governments
  • Legal fees
  • Filing/ Recording fees
  • Title examination
  • Options to purchase or lease
  • Broker fee
  • Option lapse (expense)
  • Shooting rights (U.S. GAAP expense international
    capitalize)
  • Capitalize U.S. GAAP and international.

37
38
Some Exploration Costs
c Linda Nichols
  • Costs of topographical, geological, and
    geophysical studies, rights of access to
    properties to conduct these studies, and salaries
    and other expenses of geologists, geophysical
    crews, and others conducting these studies.
    Collectively, geological and geophysical (GG)
    costs.
  • Costs of carrying and retaining undeveloped
    properties such as delay rentals, ad valorem
    taxes on the properties, legal costs for title
    defense, and maintenance of land and lease
    records.
  • Dry hole contributions and bottom hole
    contributions.
  • Costs of drilling and equipping exploratory
    wells.
  • Costs of drilling exploratory-type stratigraphic
    test wells.
  • A., B., C. are non-drilling costs. U.S. GAAP,
    expense.
  • D., E., drilling costs. Possibly capitalized,
    U.S. GAAP.

38
39
Drilling and Development Costs
c Linda Nichols
  • Development wells
  • Lease flow lines
  • Separators
  • Treaters
  • Heaters
  • Storage tanks
  • Improved recovery system
  • Nearby gas processing facilities

39
40
Oil Derrick
c Linda Nichols
41
Types of Wells
c Linda Nichols
  • Exploratory Wells unproved area
  • Stratigraphic test wells (get info)
  • Extension wells (test and extend known
    boundaries) exploratory
  • Development Wells
  • Service Wells gas injection, water injection,
    saltwater disposal development costs
  • Exploratory and development types

41
42
Successful Efforts vs. Full Costs
c Linda Nichols
42
43
Module 2 Nondrilling Exploration Costs under
Successful Efforts
c Linda Nichols
Overall Objective To gain a basic
understanding of the accounting treatment of
geological and geophysical (GG) costs.
43
44
G G Exploration
c Linda Nichols
  • Surface Techniques
  • 1. Oil Seeps
  • 2. Aerial Photos
  • 3. Satellite Surveys (Landsat 4)
  • 4. Topographical Mapping
  • 5. Geochemical surveying
  • Subsurface Techniques
  • 1. Subsurface mapping utilizing seismic
    surveys.
  • 2. Structural surface maps.
  • 3. Subsurface geophysical measurements
  • 4. Gravity meter measurements
  • 5. Magnetic surveys.

44
45
Seismic Surveys Having to do with earthquakes or
earth vibrations
c Linda Nichols
  • Two-dimensional Seismic stringing geophones in
    a line along the surface or the earth or behind a
    ship.
  • Three-Dimensional Seismic geophones in a
    closely spaced grid, gives a three-dimensional
    view.
  • Electromagnetic recording with 3D.
  • Four-dimensional surveys (time) can monitor
    water flood fronts and oil migrations within
    reservoirs.

45
46
Seismic Technology
c Linda Nichols
  • Seismic technology continued to advance, and the
    next big breakthrough occurred in the early 1960s
    with the advent of digital technology. This
    enabled processing of enormous amounts of data
    and provided dramatically improved knowledge of
    subsurface geology. Now, time-lapse or
    four-dimensional seismic, created by multiple
    surveys repeated over time, monitors reservoir
    performance and helps improve recovery
    efficiency.
  • C.E.H Ross L.E. Sloan

47
International GAAP
c Linda Nichols
  • US GAAP Expense Geological Geophysical
  • UK GAAP If the costs cannot be identified with
    a particular geological structure by year-end,
    then expense. If the costs can be identified
    with a particular structure, then the costs
    should remain capitalized at year-end.
  • IASB May capitalize if associated with
    particular resources (consistent with UK). Must
    assess for impairment.

47
48
Geological Geophysical Costs
c Linda Nichols
  • Peters Co. Pays 30,000 for GG studies on Block
    A
  • US GAAP
  • GG Expense 30,000
  • Cash 30,000
  • UK IASB specific structure
  • Intangible Assets 30,000
  • Cash 30,000

48
49
Shooting Rights
c Linda Nichols
Peters Oil obtained shooting rights on 5,000
kilometers for .50 per kilometer.
US GG expense 2,500 Cash 2,500 UK
IASB specific structure Intangible
assets 2,500 Cash 2,500
49
50
Records Maintenance Costs
c Linda Nichols
Peters has records maintenance costs of 600 on
Block C.
US Records maintenance expense 600 Cash 6
00 UK IASB specific structure Intangible
assets 600 Cash 600
50
51
UK IASB GAAP
c Linda Nichols
  • If the structure becomes proved for which these
    intangibles have been recorded, transfer the
    costs to the field as tangible assets
  • Tangible assets 33,100
  • Intangible assets 33,100

51
52
Test Well Contributions
c Linda Nichols
  • Bottom-hole contribution Contribution paid to a
    driller by adjoining property owners for
    information from drilling in a particular
    property regardless of the success or failure of
    the drilling.
  • Dry-hole contribution This concept is the same
    as bottom-hole contribution except that payment
    is made only if the drilling results in a
    dry-hole.

53
Test Well Contributions
c Linda Nichols
In order to obtain formation information, Peters
enters into the following test-well contribution
agreements on property close to Block C Well 1
bottom-hole contribution to 2,000 meters
12,000 Well 2 bottom-hole contribution to
2,000 meters 10,000 Well 3 Dry-hole
contribution 15,000 Well 4 Dry-hole
contribution 13,000
Well 1 was drilled to 2,000 meters and was
dry. US Test-well contribution
expense 12,000 Cash 12,000 UKIASB
Intangible assets 12,000 Cash 12,000 W
ell 2 was drilled to 1,500 meters and
abandoned. No entry
53
54
Test Well Contributions
c Linda Nichols
In order to obtain formation information, Peters
enters into the following test-well contribution
agreements on property close to Block C Well 1
bottom-hole contribution to 2,000 meters
12,000 Well 2 bottom-hole contribution to
2,000 meters 10,000 Well 3 Dry-hole
contribution 15,000 Well 4 Dry-hole
contribution 13,000
Well 3 was drilled to 2,500 meters and was
dry. US Test-well contribution
expense 15,000 Cash 15,000 UKIASB
Intangible assets 15,000
Cash 15,000 Well 4 was drilled to 4,000
meters and produced. No entry
54
55
Depreciation of Support Equipment
c Linda Nichols
Peters has seismic equipment that was used only
on Block A in 2008. Depreciation on the
equipment for 2008 is 8,000 and operating costs
of the equipment for the year was 10,000.
US or UK IASB with no specific structure
GG expense depreciation 8,000
Accumulated depreciation 8,000 GG expense
operating costs 10,000 Cash 10,000 UK
IASB with specific structure Intangible
assets 8,000 Accumulated depreciation
8,000 Intangible assets 10,000 Cash
10,000
55
56
Module 3 Acquisition Costs of Unproved
Property/ SE
c Linda Nichols
Overall Objective Appreciate the various type
of acquisition costs and determine when unproved
properties are impaired.
56
57
Purchase
c Linda Nichols
Peters acquired rights on Block A and paid a
signature bonus of 5,000.
US Unproved property 5,000 Cash 5,000 U
K IASB Intangible assets 5,000 Cash 5,
000
57
58
Development and Production Bonuses
c Linda Nichols
  • Development bonuses normally capitalized as a
    deferred signing bonus.
  • Production bonuses normally capitalized as a
    deferred signing bonus.

58
59
Bonus Example
c Linda Nichols
  • Peters (an IASB Co.) has a PSC with the
    government of Haran. Peters pays a signing bonus
    of 1,000,000. Peters also agrees to pay a
    production bonus of 1,200,000 when production
    reaches 1 million bbls.
  • Signing bonus
  • Intangible assets 1,000,000
  • Cash 1,000,000
  • Commercial discovery
  • Tangible assets 1,000,000
  • Intangible assets 1,000,000
  • Production reaches 1 million bbls
  • Tangible assets 1,200,000
  • Cash 1,200,000

59
60
Internal Costs
c Linda Nichols
Peters had 1,000 in overhead costs to be
allocated to two properties that were
investigated during June.
Block A investigated and acquired 500
kilometers Block B 1500 kilometers
investigated none acquired May capitalize based
on kilometers acquired Intangible assets Block
A 1,000 Overhead control 1,000 May
allocate based on kilometers investigated Block
A 500/2000 x 1,000 250 Block B 1500/2000 x
1,000 750 Intangible assets Block
A 250 Overhead expense 750 Overhead
control 1,000 Note Under US GAAP, Unproved
Property would be debited instead of intangible
assets.
60
61
Options
c Linda Nichols
Peters paid 1,000 for an option to acquire 500
kilometers.
Property purchase suspense 1,000 Cash 1,0
00 Peters decided to lease 250 of the kilometers
and paid an additional bonus of
5,000. Surrendered lease expense
500 Intangible assets (US Unproved
Property) 5,500 Property purchase
suspense 1,000 Cash 5,000
61
62
Option with Shooting Rights
c Linda Nichols
Peters paid 1,000 for an option to purchase 300
acres and shooting rights. The value of the
shooting rights alone is 400.
US GAAP GG expense 400 Property purchase
suspense 600 Cash 1,000 UK IASB
GAAP Intangible assets 400 Property
purchase suspense 600 Cash 1,000
62
63
Impairments of Unproved Property
c Linda Nichols
  • US GAAP Significant properties are assessed
    individually. Insignificant properties are
    assessed on a group basis.
  • UK GAAP All properties are assessed
    individually. Capitalized GG is included in the
    assessment.
  • IASB Assess as individual cash-generating units
    or groups of units not to be larger than a
    segment.

63
64
US IAS Significant vs. Insignificant
c Linda Nichols
If acquisition costs are Significant assess
individually Not significant impair on a
group or aggregate basis
Cost of property, company size, number of
unproved leases held, companys overall portfolio
of unproven property held.

64
65
US Impairment of Significant Property
c Linda Nichols
Peters paid a 50,000 bonus to obtain Block A,
which is individually significant. Management
has determined that Block A should be impaired
10.
Impairment expense 5,000 Allowance for
impairment Block A 5,000
65
66
US Impairment of Insignificant Properties
c Linda Nichols
At year-end, Peters has group properties totaling
300,000. An allowance for impairment for these
properties has a balance of 40,000. Management
believes the group should be 25 impaired.
.25 x 300,000 75,000 75,000 40,000
35,000 Impairment expense
35,000 Allowance for impairment
group 35,000
66
67
UK and IAS Impairment
c Linda Nichols
  • Peters paid a 50,000 bonus to obtain Block A,
    which is individually significant. Management
    has determined that Block A should be impaired
    10.
  • Amortization expense 5,000
  • Allowance for amortization and
    Impairment 5,000
  • The entry would also look like the above under
    IAS for grouped properties.

67
68
Abandonment
c Linda Nichols
  • Treatment is similar between the U.S., U.K. and
    IAS.

68
69
Abandonment
c Linda Nichols
Abandonment of Individually Significant
Property Peters has 50,000 in the unproved
property (intangible assets) account for Block A
and has an allowance for impairment for that
property with a balance of 5,000. Peters
abandons the Block.
Surrendered property expense 45,000 Allowance
for impairment 5,000 Unproved property
(Intangible assets) 50,000
Abandonment of Individually Insignificant
Properties (The UK does not have grouped
properties.) Peters has a balance of 300,000 in
an unproved properties-group account, and a
related allowance for impairment with a balance
of 75,000. Management decides to abandon one of
the properties in the group. The acquisition
cost of that property was 10,000.
Allowance for impairment group 10,000 Unprove
d property (Intang. assets) group 10,000
69
70
Reclassification of Property
c Linda Nichols
Peters has an individually significant property
with a balance of 50,000 in the unproved
property account and an allowance for impairment
with a balance of 5,000. The property becomes
proved.
US GAAP Proved property 45,000 Allowance for
impairment 5,000 Unproved property 50,000
UK IAS Tangible assets 45,000 Allowance
for impairment 5,000 Intangible
assets 50,000
70
71
Reclassification Of Property
c Linda Nichols
Assume, instead, that an insignificant unproved
property is proved. The acquisition cost of the
property was 10,000. The unproved
property-group account has a balance of 300,000
and the related allowance for impairment for the
group has a balance of 75,000.
US GAAP Proved property 10,000 Unproved
property group 10,000 IAS Tangible
assets 10,000 Intangible assets 10,000
Assume, instead, that only half of the above
property was proved
US GAAP Proved property 5,000 Unproved
property group 5,000 IAS Tangible
assets 5,000 Intangible assets
5,000
71
72
Cost Centers
c Linda Nichols
  • US GAAP May be a property or reasonable
    aggregation of properties with a common
    geological structure. The field is by far the
    most used.
  • UK GAAP On a field basis.

72
73
Module 4 Drilling and Development
c Linda Nichols
Overall Objective Study the two types of
exploration drilling costs and both drilling and
nondrilling development costs.
73
74
Drilling Contracts
c Linda Nichols
  • Meter rate contracts drilling contractor is paid
    a specific amount per meter of hole drilled.
  • Day-rate contracts drilling contractor is paid a
    specified amount of each day worked on the well,
    regardless of the number of meters drilled
    (virtually all offshore work).
  • Turnkey contracts contractor performs specified
    services for a set price and the operator merely
    has to turn the key when the project is
    completed.
  • Overriding Royalty interest to Driller.

74
75
Some Drilling Terms
c Linda Nichols
  • Rigging-up drilling rig and equipment are set
    up.
  • Spudding-in after rigging up, the well is ready
    to be spudded-in.
  • Spud date date the rotary drilling bit touches
    ground.
  • Tripping-in or tripping-out pipes lowered into
    hole drill pipes may have to be removed when
    drill bit becomes worn or damaged or casing is
    set.
  • Blow-out prevention equipment helps prevent an
    uncontrolled explosion of oil/gas from a well.
  • Fishing attempting to recover lost equipment in
    the hole.
  • Sidetracking plugging the lower portion of a
    hole and drilling around an obstruction (e.g.,
    lost equipment)
  • Logging once total depth is reached, a logging
    device is lowered to the bottom. It is pulled up
    and measures and records properties of the
    formations and the fluids. Helps determine
    whether to complete or plug the well.

75
76
More Drilling Terms
c Linda Nichols
  • Perforating use a perforating gun to make holes
    in casing and cement so oil and gas can flow into
    the well bore.
  • Fracturing in sandstone, coarse sand or
    synthetic beads (called proppant) is mixed with a
    fluid, pumped into the formation under high
    pressure, causing the formation to split or
    fracture.
  • Acidizing in calcium carbonate material, acid is
    pumped into the formation to dissolve portions of
    the formation to create channels.
  • Swabbing if pressure is low, must swab the well
    to remove the fluid (mud). Small expandable
    packer is lowered into the well, and by swiftly
    pulling the packer back up, any fluid is removed.
  • Directional well drilled straight to a
    predetermined depth and then curved or angled to
    a desired location.
  • Horizontal well initially drilled straight, but
    gradually curved into a horizontal direction.

76
77
Scallop Gun
c Linda Nichols
78
Exploratory Drilling - SE
c Linda Nichols
  • U.S. and U.K. Exploratory wells are capitalized
    if successful and are expensed if dry.
  • Unsuccessful appraisal wells are charged to
    expense under U.S. GAAP. In the U.K., these
    wells may remain capitalized as long as further
    appraisal is planned. The IASB will likely
    require these wells to be expensed.
  • In the 1970s, engineers developed down-hole
    motors that could rotate the drill bit at the
    bottom of the well, allowing drillers to steer
    the bit and gradually guide the hole off
    vertical, eventually turning 90 degrees.
  • C.E.H. Ross L.E. Sloan

78
79
Types of Dual Purpose Platforms
c Linda Nichols
  • Conventional jacket and deck--steel deck with
    jacket extending down to sea bottom, anchored in
    place by steel piles.
  • Concrete gravity platform--massive pre-cast
    structures that sit on the ocean floor, held in
    place by its own weight.
  • Guyed tower--uniform-tubular steel structure that
    supports a deck and anchored laterally to the
    ocean floor by steel cables.
  • Tension-leg floating structure held in place by
    vertical, tubular steel members anchored to the
    ocean floor by piles.

Source IRS Litigation Guideline Memorandum, Rev.
TL-91, October 14, 1993.
79
80
Offshore Platform
c Linda Nichols
81
Offshore Drilling
c Linda Nichols
  • Mobile rigs drill exploratory and evaluation
    wells.
  • Massive platforms drill the development wells
    (e.g., Hoover-Diana Platform)
  • Production facilities are constructed on the
    platform to handle the output.
  • Type of Mobile Exploratory Drilling Rigs
  • Submersible Rigs - few today shallow water.
  • Jack-up Rigs--350 to 400 feet--legs jacked up
    while moving.
  • Semi-submersible Rigs -- e.g.,Marine 700
  • Drilling Barges and Drilling Ships

81
82
Development Drilling - SE
c Linda Nichols
  • All development wells are capitalized.
  • In the U.S., a development well is a well drilled
    in a proved area to a known productive depth. In
    the U.K., development wells include all wells
    drilled after the decision to develop the field
    has been made. Therefore, some development wells
    in the U.K. might be exploratory in the U.S.
  • Delineation wells are exploratory in the U.S. but
    are development in the U.K.

82
83
Drilling Development Costs/ SE
c Linda Nichols
Exploratory Well Drilling costs
Development Well Drilling costs
Dry Successful
Capitalized
Expensed Capitalized
83
84
Christmas Tree
c Linda Nichols
85
IDC vs. Tangible Costs
c Linda Nichols
85
86
Pumper
c Linda Nichols
87
Exploratory Drilling Costs
c Linda Nichols
Peters is drilling an exploratory well on Block
A. IDC are 30,000 and LWE costs are 200,000.
The unproved property (intangible assets) account
for Block A has a balance of 30,000.
Wells in progress IDC
30,000 Wells in progress LWE 200,000 Cash
230,000 Assume the well is
dry Dry hole expense 230,000 Wells in
progress IDC 30,000 Wells in progress
LWE 200,000 Assume, instead that the well is
successful. Wells related EF IDC
30,000 Wells related EF LWE 200,000 Wells
in progress IDC
30,000 Wells in progress
LWE 200,000 Proved property (UK IAS
Tangible assets) 30,000 Unproved
property (UK IAS Intangible assets) 30,000

87
88
Time Limit on Wells in Suspension
c Linda Nichols
  • US One year limit unless a major capital
    expenditure is required and more successful wells
    are needed to justify the expenditure, the well
    would be completed if the expenditure were made,
    and drilling of additional wells is planned.
  • UK Three year limit in offshore or frontier
    environments, two years elsewhere. Circumstances
    may dictate costs being carried beyond these
    limits.

88
89
Workovers
c Linda Nichols
  • Restore or stimulate production from a particular
    well.
  • Handled similarly in U.S., U.K., and IAS.
  • If the life or productivity of the well is
    materially increased, then capitalize.
  • If the workover just maintains production, then
    expense (e.g., lease operating expense).

89
90
Workovers
c Linda Nichols
Peters paid 60,000 for a workover on well 1.
Workovers in progress 60,000 Cash 60,000
If useful life is increased Wells related
EF LWE 60,000 Workovers in
progress 60,000 If useful life not
increased Operating expense 60,000 Workovers
in progress 60,000
90
91
Enhanced Recovery
c Linda Nichols
  • Enhanced recovery technology has provided
    impressive increases in the ultimate recovery of
    the total oil in place in a reservoir. For
    example, injecting CO2 into old oil fields has in
    some cases doubled recoverability up to 60 of
    oil in place, further extending the fields life.
  • C.E.H. Ross L.E. Sloan

92
Service Wells Development Wells
c Linda Nichols
Peters drills a gas injection well on Block A at
a cost of 80,000.
Wells in progress LWE 80,000 Cash 80,
000 When completed Wells related EF
LWE 80,000 Wells in progress LWE 80,000
92
93
Capitalization of Interest
c Linda Nichols
  • U.S. Interest is capitalized during the
    construction phase based on average accumulated
    expenditures.
  • U.K. Permits capitalization at the companys
    option. Most do not capitalize except for very
    large projects.
  • IASB Expensing is common. Capitalization is
    permitted. If there is a specific borrowing for
    the project, that amount can be capitalized. If
    borrowing is done centrally, the amount to be
    capitalized is the amount expended on the asset
    multiplied by the average borrowing rate. (IAS
    23).

93
94
Interest Capitalization
c Linda Nichols
Peters has unproved property costs on Block A of
40,000 on January 1. During the year, Peters
incurred exploratory drilling costs of 400,000.
A 500,000, 8 note was outstanding during the
entire year specifically for this Block. Total
interest cost for the company is 800,000.
US Avg. Expenditures 40,000
440,000 240,000 2 Interest to
capitalize 240,000 x .08 19,200 Wells in
progress IDC 19,200 Interest expense
19,200 IAS 500,000 x .08 40,000 Wells in
progress IDC 40,000 Interest
Expense 40,000
94
95
Module 5 Proved Property Cost Disposition under
SE
c Linda Nichols
  • Overall Objective
  • To gain a basic understanding of cost disposition
    using SE accounting.

95
96
Basic Depreciation, Depletion Amortization
Formula
c Linda Nichols
  • Production for the Year
  • X book value at year end
  • Estimated reserves at
  • the beginning of the year

96
97
Equivalent DDA Formula
c Linda Nichols
  • Book Value
  • X Production for the year
  • Estimated reserves at
  • the beginning of the year

97
98
Differences in Reserves
c Linda Nichols
  • US GAAP proved reserves are used for leasehold
    proved developed reserves are used for wells and
    equipment.
  • UK GAAP for all costs, permits either proved
    developed and proved undeveloped or proven and
    probable reserves.

98
99
SE DDA Example - US
c Linda Nichols
  • Exploration Inc. drilled the first successful
    well on Block A early in 2008. Data for the
    block as of 12/31/08 follows
  • Signing bonus 80,000
  • Wells related EF 200,000
  • Production during 2008, bbl 6,000
  • Proved reserves, bbl 12/31/08 900,000
  • Proved developed reserves, bbl 12/31/08
    100,000
  • Probable reserves, bbl 12/31/08
    300,000
  • DDA for Leasehold
  • 6,000 X 80,000 530
  • 900,000 6,000
  • DDA for Wells Equipment
  • 6,000 X 200,000 11,321
  • 100,000 6,000

99
100
SE DDA Example - UK
c Linda Nichols
  • Exploration Inc. drilled the first successful
    well on Block A early in 2008. Data for the
    block as of 12/31/08 follows
  • Signing bonus 80,000
  • Wells related EF 200,000
  • Production during 2008, bbl 6,000
  • Proved reserves, bbl 12/31/08
    900,000
  • Proved developed reserves, 12/31/08
    100,000
  • Probable reserves, bbl 12/31/08 300,000
  • Using total proved
  • 6,000 X 280,000 1,854
  • 900,000 6,000
  • Using proved and probable
  • 6,000 x 280,000 1,393
  • 900,000 300,000 6,000

100
101
SE DDA Example 2 - Calculate 2008 DDA for lease
A
c Linda Nichols
  • The balance sheet for Roberts Oil Company as of
    12/31/07 is as follows for Block A
  • Property costs proved properties 110,000
  • Less Accumulated DDA 20,000
  • Net property costs 90,000
  • Wells related equipment 2,000,000
  • Less accumulated DDA 300,000
  • Net wells equipment
    1,700,000
  • Roberts activities during 2008 related to Lease
    A were
  • Exploratory dry hole drilled 300,000
  • Development dry hole drilled 275,000
  • Tanks separators installed 150,000
  • Production 100,000 bbl
  • Proved reserves 12/31/08 1,020,000
    bbl
  • Proved developed reserves 12/31/08 900,000 bbl
  • Probable reserves 12/31/08 200,000 bbl

101
102
DDA Answer - US
c Linda Nichols
  • DDA for Leasehold
  • 100,000 X 90,000 8,036
  • 1,020,000 100,000
  • DDA for Wells Equipment
  • 100,000 X 2,125,000 212,500
  • 900,000 100,000
  • Equipment costs
  • Beginning equipment (net) 1,700,000
  • Development dry hole 275,000
  • Tanks separators 150,000
  • Total 2,125,000

102
103
DDA Answer - UK
c Linda Nichols
  • Using Total Proved
  • 100,000 x 2,215,000 197,767
  • 1,020,000 100,000
  • Equipment of 2,125,000 property of 90,000
  • Using proved and probable
  • 100,000 x 2,215,000 167,803
  • 1,020,000 200,000 100,000

103
104
Joint Production
c Linda Nichols
  • When both oil and gas are produced together, a
    conversion to equivalent energy units is required
    in both the U.S. and U.K. Commonly, a rate of 1
    bbl 6 mcfs is used.

104
105
Exclusion of Costs
c Linda Nichols
  • US If significant development costs are
    incurred before all proved reserves are
    developed, exclude the portion of the development
    costs attributable to the undeveloped proved
    reserves.
  • UK All costs are included since either all
    proved reserves or proved and probable reserves
    are used for depletion.

105
106
Exclusion of Costs Example - US
c Linda Nichols
  • Production platform constructed at a cost of
    4,000,000
  • 15 wells drilled total of 60 wells planned
  • Exclude 45/60 X 4,000,000 3,000,000
  • Include 1,000,000

106
107
Exclusion of Reserves
c Linda Nichols
  • US If proved developed reserves can be produced
    only after an improved recovery system is
    constructed, exclude the proved developed
    reserves associated with the costs that have not
    yet been incurred.
  • UK - If proved developed reserves can be produced
    only after an improved recovery system is
    constructed, include an estimate of the future
    development costs in the depletion calculation.

107
108
Exclusion of Reserves Example
c Linda Nichols
  • Gas injection project will cost 3,000,000.
    Proved developed reserves are 1,200,000 bbls but
    500,000 of those barrels cannot be produced until
    after the project.
  • US - Exclude 500,000 bbls PDR associated with
    project in computing depletion.
  • UK Include all proved (or proved and probable)
    reserves in depletion but include the 3,000,000
    cost of the project in the calculation.

108
109
Module 6 Impairment and Abandonment
c Linda Nichols
  • Overall Objective
  • Upon completion of this module, you will have
    a basic understanding of accounting for asset
    retirement obligations and impairments under
    successful efforts.

109
110
Dismantlement Costs
c Linda Nichols
  • Handled the same in the U.S. and internationally
    (IAS 37).
  • The present value of the future obligation is
    recorded as an asset and liability on the date
    the environment is disturbed. Annual accretion
    of discount on the liability is charged as a type
    of interest.

110
111
Dismantlement Costs Example
c Linda Nichols
  • When the environment is disturbed, the present
    value of the future obligation at the companys
    cost of capital at 6 is 1,000,0000.
  • Wells related EF 1,000,000
  • Liability for restoration 1,000,000
  • At the end of one year, accrete discount
  • 1,000,000 x .06 60,000
  • Accretion expense 60,000
  • Liability for restoration 60,000

111
112
Impairment of Producing Properties
c Linda Nichols
  • US GAAP 3 stages
  • Trigger event.
  • Compare BV (include ARO) to undiscounted cash
    flows (exclude ARO).
  • If BV gt undiscounted cash flows, write down to
    fair value (usually discounted cash flows
    excluding ARO).
  • IAS UK 2 stages
  • Trigger event.
  • Compare BV (without ARO) to FV (usually
    discounted cash flows excluding ARO) minus the
    ARO liability.

112
113
Impairment Example
c Linda Nichols
  • Book value of field without ARO 3,000,000
  • Carrying amount of ARO liability 521,000
  • Undiscounted future net cash flows
    2,800,000
  • Discounted future net cash flows before ARO
    2,100,000
  • US write-down 3,521,000 2,100,000 1,421,000
  • IAS UK (3,000,000) (2,100,000 521,000)
    1,421,000
  • Loss on producing properties 1,421,000
  • Accumulated capitalized cost reduction
    1,421,000
  • Can credit accumulated DDA instead of
    Accumulated capitalized cost reduction.

113
114
Partial Abandonment
c Linda Nichols
  • Treatment is consistent between the U.S., U.K.
    and IASB. If only a portion of a cost center is
    abandoned (a well), the item is treated as fully
    amortized and is charged to accumulated DDA.

114
115
Retirement of Well Example
c Linda Nichols
  • Accumulated DDA 100,000
  • Wells related EF 100,000

115
116
Module 7 Full-Cost Accounting
c Linda Nichols
  • Overall Objective
  • Upon completion of this module, you will have
    a basic understanding of the full-cost method of
    accounting.

116
117
Basics of FC
c Linda Nichols
  • All costs, except production costs, are
    capitalized. This includes GG costs and all dry
    holes.
  • US - cost center is a country.
  • UK - cost center may consists of regional groups
    of countries.
  • IASB may eliminate FC in the future.
  • Both in the U.S. and internationally, all costs
    must be written off over proved reserves.

117
118
Basic DDA
c Linda Nichols
  • Peters has 2,500,000 of costs to be amortized in
    the Germany (book value) at December 31, 2008.
    Production for 2008 was 25,000 bbls and proved
    reserves at December 31, 2008 was 400,000 bbls.
    Probable reserves are 100,000 bbls.
  • US and UK using proved
  • 25,000 x 2,500,000 147,059
  • 400,000 25,000

118
119
Asset Retirement Obligations (ARO)
c Linda Nichols
  • Handle as with SE. When the environment is
    disturbed, estimate the future cost and record
    the present value of those costs as an asset and
    liability.
  • The asset is included in the DDA calculation.

119
120
Inclusion of Future Development Costs
c Linda Nichols
  • Because all proved reserves are used to compute
    DDA, the future costs to develop the undeveloped
    reserves must be estimated and added to the
    capitalized costs to be amortized.

120
121
Exclusion of Costs
c Linda Nichols
  • US Costs related to unproved properties may be
    excluded until commercial reserves are found or
    the property is impaired or abandoned. Costs
    related to major development projects that
    require significant future expenditures to
    determine proved reserve quantities may also be
    excluded.
  • UK Costs related to unproved properties may be
    excluded until the evaluation of the property is
    complete.

121
122
Impairment of Unproved Property
c Linda Nichols
  • US As with SE, properties are considered
    significant or are grouped. When impaired, an
    asset account, impairments, is debited and the
    allowance is credited. If excluding U/P from
    DDA, the U/P net of allowance is excludable, but
    the impairment asset account must be included.
  • UK Similar treatment except that all properties
    are considered significant.

122
123
Impairment Example US Significant Property
c Linda Nichols
  • Peters paid a 50,000 bonus to obtain Block A,
    which is individually significant. Management
    has determined that Block A should be impaired
    10.
  • Impairment 5,000
  • Allowance for impairment Block A 5,000

123
124
UK and IASB Impairment
c Linda Nichols
  • Peters paid a 50,000 bonus to obtain Block A,
    which is individually significant. Management
    has determined that Block A should be impaired
    10.
  • Impairment (Intangible) 5,000
  • Allowance for amortization and
    Impairment 5,000
  • The entry also would look like the above under
    IASB for grouped properties.

124
125
Abandonment
c Linda Nichols
  • US UK abandoned costs remain capitalized and
    included in the amortization base.

125
126
Abandonment Example
c Linda Nichols
  • Abandonment of Individually Significant Property
  • Peters has 50,000 in the unproved property
    (intangible assets) account for lease A and has
    an allowance for impairment for that property
    with a balance of 5,000. Peters decides to
    abandon the lease.
  • Abandoned costs 45,000
  • Allowance for impairment 5,000
  • Unproved property (Intangible asset) 50,000

126
127
Advanced DDA
c Linda Nichols
  • Peters had the following costs in Germany at
    December 31, 2008
  • Proved property 30,000
  • Unproved property 50,000
  • Nondrilling exploration, P/P 60,000
  • Nondrilling exploration, U/P 70,000
  • Development well, P/P 500,000
  • Wells in progress, U/P 600,000
  • Dry holes, U/P 700,000
  • Accumulated DDA (500,000)
  • Future development costs 300,000
  • Proved reserves, 12/31/08 600,000 bbls
  • Production, 2008 100,000 bbls
  • Probable reserves, 12/31/08 200,000
    bbls

127
128
Include All Costs
c Linda Nichols
  • Using proved reserves
  • 1,510,000 300,000 1,810,000
  • 100,000 x 1,810,000 258,571
  • 600,000 100,000

128
129
Exclude All Possible Costs
c Linda Nichols
  • Using proved reserves
  • Exclude
  • U/P 50,000
  • Nondrilling exploration, U/P
    70,000
  • Wells in progress, U/P 600,000
  • 720,000
  • 1,810,000 - 720,000 1,090,000
  • 100,000 x 1,090,000 155,714
  • 600,000 100,000

129
130
U.S. Ceiling Test
c Linda Nichols
  • Compares the book value of the cost center to a
    ceiling composed of
  • PV of future net revenues (using current prices
    and costs and 10 rate for proved reserves only)
  • Costs of properties being excluded
  • The LCM of unproved properties included
  • - Tax difference on above

130
131
UK Impairment
c Linda Nichols
  • Follow FRS 11 as interpreted in 2001 SORP.
  • Perform test only if triggered.
  • Compute cash flow projections using expected
    prices and costs.
  • Use commercial reserves may include probable
    (or use only proved)
  • Flexibility in discount rate.
  • Risks may be reflected by adjusting either future
    cash flows or the discount rate.

131
132
Module 8 Production Activities
c Linda Nichols
  • Objective
  • Upon completion of this module, you will
    understand how to account for direct and
    allocable costs of production. You will also
    understand the basics of well economics.

132
133
International GAAP
c Linda Nichols
  • Treated similarly worldwide. Production costs
    are expensed.
  • Costs may be direct or indirect.
  • Indirect costs must be allocated to the fields
    covered on a reasonable basis.

133
134
Direct Cost Examples
c Linda Nichols
  • Repairs that can be traced to individual wells.
  • Repair of a pumping unit.
  • Wages for employees who work on only one
    property.
  • Wages for employees who designate hours worked on
    certain properties.
  • Fuel for properties, invoices indicate particular
    properties.
  • Depreciation of a truck used on one property.
  • Workover for the purpose of restoring production.

134
135
Allocable (Indirect) Cost Examples
c Linda Nichols
  • Wages for employees who work on several
    properties, detailed records not kept.
  • District office expenses.
  • Depreciation of a truck used on multiple
    properties without detailed records of use.
  • Depreciation of district office facilities.

135
136
Items to Consider in Completion Decision
c Linda Nichols
  • Quantity of reserves
  • Timing of production
  • Future selling price
  • Future production costs, including production
    taxes
  • Completion costs
  • Cost of capital

136
137
Capital Decisions
c Linda Nichols
  • If we have drilled a well at a cost of 300,000
    and it will cost an additional 150,000 to
    complete, should it be completed if the present
    value of future net revenues is expected to be
    250,000?

137
138
The Concept of Sunk Costs
c Linda Nichols
  • Costs already expended (that cannot be sold and
    recouped) are sunk costs.
  • Always look to the future.
  • Compare future cost to the PV of future net cash
    flows.
  • A project may be unprofitable, but a loss might
    be minimized by completing it.

138
139
Example
c Linda Nichols
  • Peters Oil estimates the following costs to drill
    and complete a well on Block A
  • Drilling costs 300,000
  • Completion costs 100,000
  • Selling price per bbl 22
  • Lifting costs per bbl 4
  • Royalty interest 20
  • Is the well profitable at 20,000 or 30,000 or
    40,000 bbls?

139
140
Solution
c Linda Nichols
  • 20,000 bbl 30,000
    bbl 40,000 bbl
  • Total revenue (22 x bbl) 440,000
    660,000 880,000
  • Less RI's share (20) 88,000
    132,000 176,000
  • WI's share
    352,000 528,000 704,0
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