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oil and gas accounting

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integrated oil and gas company
is one involved in E&P activities as well as at least one downstream activity
independent oil and gas company
is one involved primarily in only E&P activities
fault trap
a trap formed when the movement of the earth's crust causes different rock strata to offset or shear off. a nonporous rock formation that has shifted stops the movement of oil or gas within an offsetting formation that allows petroleum to migrate
anticline
a trap formed by the folding of the earth's crust dome. this upward folding is caused by pressures developed from the earth's molten core. an impervious or nonporous layer of rock overlying traps the oid or gas in the structure. most of the earth's oil and gas reserves are found in this.
salt dome
with substantial heat and pressure, salt buried deep within the earth may slowly begin to move upward, as it does so the rock layers are cracked, bent and folded, often oil and gas are trapped in these cracked and folded rock beds
porosity
is the measure of the pore space
permeability
measures the connectability of the pores, which detetmines the ability of the petroleum to flow through the rock from one pore space to another
reconnaissance
survey is a G&G study covering a large or broad area
detailed survey
is a G&G study covering a smaller area called an area of interest
mineral rights
refer to the ownership, conveyed by deed, of any mineral beneath the surface
surface owner
has the right to use the surface in any legal way that the owner deems appropriate
royalty interest
this type of mineral interest is created by leasing
working interest
this interest is created via leasing and is responsible for the exploration, development, and operation of a property
overriding royalty interest
is a nonworking interest created from the working interest
production payment interest
this interest is a nonworking interest created out of a working interest and is similar to an ORI except that it is limited to a specified amount of oil or gas, money, or time, after which it reverts back ti interest from which it was created and ceases to exist
lessor
is the mineral rights owner who leases the property to another party and retains a royalty interest
lessee
the party leasing the property, receives a working interest
day rate
generally used. payment based on the number of days drill
footage rate
payment based on the number of feet drilled
turnkey basis
payment of a fixed sum of money based on drilling to a certain depth or stage of completion
spud date
is the date the rotary drilling bit touches the ground
directional wells
are wells that are normally drilled straight to a predetermined depth and then curved or angled so that the bottom of the wellbore is at the desired location
horizontal wells
are also initially drilled straight down but then are gradually curved until the hole runs parallel to the earth's surface
logged
after total depth has been reached, this device lowers to the bottom of the well and then pulling it back up to the surface
secondary recovery
consists of inducing an artificial drive into a formation to replace the natural drive
tertiary recovery
methods include injection of chemicals, gas, or heat into the well to modify the fluid properties and thereby enhance the movement of the oil through the formation
delineation well
used for to refer to the first well drilled in a location where there has been no previous drilling or production. what size, how broad it is, exploratory or developmental
council of petroleum accountants societies
COPAS
COPAS
was formed in 1961, with its activities and projects directed primarily toward issues and problems encountered in joint interest operations
nondrilling exploration costs
gets expense
dry hole contribution
payment is made only if the well is dry or not commercially producible
bottom-hole contribution
payment is made when an agreed-upon depth is reached, regardless of the outcome of the well
land in fee
means that both the mineral rights and the surface rights are acquired rather than just the mineral rights
nonrecoverable
the payments are additional costs of acquiring the property and should be capitalized as an additional leasehold
recoverable
the payments should be held in a receivable or suspense account until recovered. if not recovered it should be expense as surrendered lease expense or surrender and abandonment expense
impairment
occurs when there is an indication that a property's value has declined to an amount that is less than the purchase price
how often do you check for impairment
periodically
land department
acts on information obtained from the exploration department's activities and from land department scouts in acquiring properites
intangible drilling costs
(IDC) may be expensed as incurred
christmas tree
refers to the valves, pipes, and fittings assembly arrangemnet of the valves, pipes, and fittings assembly that is used to co9ntrol the flow of oil and gas form the wellhead
suspended well cost
up to 1 year/ demonstrate after 1st year