Course Description
This five-day program develops an essential understanding of Oil & Gas Exploration & Production (E&P) accounting, reporting and performance measurement issues and practices. It develops your ability to prepare, use and critically evaluate information on E&P activities, applying specialist industry knowledge and relevant analytical skills.
Course Objective
The programme begins with an overview of oil and gas reservoirs, reserves and the field life cycle, and introduces the organisational and financial arrangements associated with Joint Ventures and Production Sharing Contracts (PSCs).
The nature and sources of Generally Accepted Accounting Principles (GAAP) for the E&P industry are established before examining the accounting policies, standards and key performance indicators relevant to each major phase of the field life cycle: exploration and evaluation, development and production.
Topics covered in this part of the programme include the successful efforts and full cost methods of accounting, the classification of assets as tangible or intangible, the unit of production method for depreciation of capitalised costs, and the testing for impairment of oil and gas assets.
The programme proceeds to consideration of E&P issues in accounting for sales revenues and for acquisitions and disposals, the disclosure of commitments and contingencies by oil and gas companies, and accounting for removal and restoration of oil and gas facilities.
Course Certificate
Masters Consultant certificate will be issued to all attendees completing minimum of 75% of the total tuition hours of the course.
Who Should attend?
This program is designed specifically for all who work with financial information and measures of performance for E&P activities. A basic understanding of financial statements and the recording of financial transactions is required.
Course Outline
Day 1: Joint Ventures and Production Sharing Contracts
Introduction to the E&P Industry
- Oil and gas reservoirs
- Oil and gas reserves
- The field life cycle
Joint Ventures
- Joint operating agreements
- Cash advances
- Billing statements
Production Sharing Contracts
- Contract terms and conditions
- Cost oil and profit oil
- Cash flow implications
- Reserve implications
Day 2: Accounting for Exploration and Development Costs
Generally Accepted Accounting Principles (GAAP) for E&P
- Company law
- Stock exchange regulations
- International financial reporting standards (IFRS)
National accounting standards and guidelines
Drilling Costs
- Time, depth and cost
- Well cost reporting
Pre-development Costs
- Licence, geological and geophysical costs
- Exploration and evaluation drilling costs
- Successful efforts and full cost methods
- Cost centres and cash-generating units
- Finding costs per barrel
Development Costs
- Transfer of pre-development costs
- Property, plant and equipment
- Development wells
- Borrowing costs
- Finding and development costs per barrel
Day 3: Production, Depreciation and Impairment
Production Costs
- Operating costs
- Royalties
- Cost of sales
- Production costs per barrel
Depreciation of Oil and Gas Assets
- The unit-of-production (UOP) method
- Matching costs with reserves
- Changes in costs and reserves
- Exceptions to the UOP method
Impairment of Oil and Gas Assets
- Indications of impairment
- Estimating value in use
- Net realisable value
- Accounting for impairment
Day 4: Sales, Acquisitions, Disposals and Decommissioning
Sales Revenues
- Revenue recognition
- Long-term gas contracts
- Entitlements and liftings
- Shared pipelines and tariffs
Mergers, Acquisitions and Disposals
- Business combinations
- Purchases and sales of oil and gas interests
- Farm outs
- Carried interests
Commitments, Contingent Liabilities and Provisions
- Recognition and reporting
- E&P company disclosures
Decommissioning, Removal and Restoration
- Costs requiring provision
- Measuring the amount of provision
- Accounting for removal and restoration costs
- Cash flow implications
Day 5: Supplementary Disclosures and Corporate Sustainability
Supplementary Disclosures
- Return on capital employed
- Total shareholder return
- SEC filings
Duration
