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International Petroleum Accounting PDF

602 Pages·2005·11.68 MB·English
by  Gallun
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WG00(i-x).qxd 10/5/04 12:35 PM Page i I NTERNATIONAL P ETROLEUM A CCOUNTING WG00(i-x).qxd 10/5/04 12:35 PM Page ii WG00(i-x).qxd 10/5/04 12:35 PM Page iii I NTERNATIONAL P ETROLEUM A CCOUNTING Charlotte J.Wright, Ph.D., CPA and Rebecca A. Gallun, Ph.D. WG00(i-x).qxd 10/5/04 12:35 PM Page iv Copyright ©2005 by PennWell Corporation 1421 S. Sheridan Road/P.O. Box 1260 Tulsa, Oklahoma 74101 800.752.9764 +1.918.831.9421 [email protected] www.pennwellbooks.com www.pennwell.com Managing Editor: Marla Patterson Production Editor: Sue Rhodes Dodd Cover Designer: Sean McGee Book Designer: Brigitte Coffman Library of Congress Cataloging-in-Publication Data Wright, Charlotte J. International petroleum accounting / Charlotte J. Wright and Rebecca A. Gallun. p. cm. ISBN 1-59370-016-4 1. Petroleum industry and trade--Accounting. 2. International business enterprises-- Accounting. I. Gallun, Rebecca A. II. Title. HF5686.P3W75 2004 657'.862--dc22 2004010611 All rights reserved. No part of this book may be reproduced, stored in a retrieval system, or transcribed in any form or by any means, electronic or mechanical including photocopying or recording, without the prior permission of the publisher. Portions of FASB Statement No. 69, Disclosures about Oil and Gas Producing Activities, copyright by Financial Accounting Standards Board, 401 Merritt 7, P.O. Box 5116, Norwalk, Connecticut 06856-5116, U.S.A., are reprinted with permission. Complete copies of this document are available from the FASB. Printed in the United States of America 1 2 3 4 5 09 08 07 06 05 WG00(i-x).qxd 10/5/04 12:35 PM Page v To Joe Wright whose understanding, support and patience was instrumental in making this book come together. And to Horace R. Brock, mentor, scholar, and friend, whose influence on international petroleum accounting practices is truly remarkable. WG00(i-x).qxd 10/5/04 12:35 PM Page vi WG00(i-x).qxd 10/5/04 12:35 PM Page vii Contents Preface ......................................................................................................ix Chapter 1 Upstream Petroleum Operations..............................................................1 Chapter 2 Industry Accounting Practices...............................................................21 Chapter 3 Contracts That Influence Accounting Decisions...................................35 Chapter 4 Accounting for Pre-license Prospecting, Nondrilling Exploration, & License Acquisition Costs—Successful Efforts ...............................73 Chapter 5 Accounting for Exploratory Drilling & Appraisal Costs— Successful Efforts................................................................................109 Chapter 6 Accounting for the Costs of Development—Successful Efforts.........129 Chapter 7 Depreciation, Depletion, & Amortization—Successful Efforts..........157 Chapter 8 Full Cost Accounting in International Operations...............................191 Chapter 9 Accounting for Production Costs & Company Evaluation.................227 Chapter 10 Recognition of Revenue.......................................................................263 Chapter 11 Impairment of Proved Property, Wells, Equipment, & Facilities........307 Chapter 12 Accounting for Future Decommissioning & Environmental Costs.......327 Chapter 13 Accounting for International Joint Operations....................................361 Chapter 14 Disclosure of Cost & Reserve Information.........................................395 Appendix A AIPN 2002 Model Form International Operating Agreement............423 Appendix B AIPN Model Form International Accounting Procedure....................515 Appendix C SEC Reg. S-X, Rule 4-10.....................................................................545 Appendix D Acronyms Commonly Used in the International Petroleum Industry...559 Index .............................................................................................................561 vii WG00(i-x).qxd 10/5/04 12:35 PM Page viii WG00(i-x).qxd 10/5/04 12:35 PM Page ix Preface Changes are constantly occurring in the international oil and gas industry. Currently, accounting practices in the industry are undergoing some of the most significant developments since the 1970s. It is our hope that this book will provide a resource, not only to those who are converting to International Accounting Standards, but also to those who must cope with the maze of financial, tax, and contract accounting issues faced on a daily basis. International Petroleum Accountingwas written to serve as a reference source for accountants, auditors, analysts, and others seeking to understand and apply accounting principles and practices in the international petroleum industry. We believe that the book will also be useful as a college textbook. Chapter 1 provides a brief introduction to oil and gas accounting standards including the phases of operations encountered in upstream operations that are essential to understanding the discussions throughout this book. The remaining chapters discuss various topics related to accounting for international oil- and gas-upstream operations. These include the international operating environment (including contracts and policies encountered in international operations), accounting for the various phases of operations encountered in international upstream operations, joint interest accounting, and required disclosures for oil and gas producing companies. The Securities and Exchange Commission has indicated that it intends to pursue a dual objective of upholding high quality financial reporting domestically, while encouraging convergence toward a high quality global financial reporting framework. Toward this end, at the present time there is an effort underway to harmonize Financial Accounting Standards Board and International Accounting Standards Board (IASB) standards. In addition, there is a significant global movement toward acceptance of International Accounting Standards (IAS). This is evidenced by the European Union’s decision that member countries should convert to IASB standards by 2005. Currently, oil and gas producers operating internationally must follow the various international accounting standards that apply to their business activities as well as complying with any industry-specific accounting standards. At the present time, there is no oil and gas industry-specific IASB standard. The IASB Extractive Industries Steering Committee released an Issues Paper in 2000, but given the many pressing matters faced by the IASB, that project is no longer a high priority. The IASB has indicated that in the absence of a specific IAS, companies may look to the pronouncements of other internationally recognized standard-setting bodies and to accepted industry practices, provided that the accounting policies are consistent with the IASB Framework. ix

Description:
This long-awaited text explains, examines, and discusses various aspects of accounting in international petroleum operations. The authors discuss and illustrate international petroleum contracts and related contract accounting issues that arise and contrast U.S. accounting standards with those of ot
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