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US GAAP for Upstream (E&P) Oil and Gas

Introduction

US GAAP for Upstream (E&P) Oil and Gas

Objectives

You will learn

• • How to apply the key financial accounting standards applicable to upstream oil and gas entities reporting under US GAAP and SEC regulation
  • To appreciate the impact on results of applying the full cost and successful efforts methods of accounting
  • The uses of reserves in financial accounting, their definitions and classification
  • Learn the primary differences between the two major oil and gas accounting methods, successful efforts and full cost accounting
  • Know how to record in the financial records the effect of oil and gas companies' exploration, development and production activities, including depreciation, depletion and amortization expenses and dismantlement, restoration and abandonment costs
  • Understand the unique presentation and disclosure requirements for SEC-registered upstream oil and gas companies
  • Learn to evaluate financial and operational metrics used to assess oil and gas firm's exploration and production business, such as finding costs, reserve value added to spending ratio and other reserve-based metrics
  • Which methods of depreciation to apply to produce properties
  • How to account for impairment and asset retirement obligations
  • How to recognize revenue arising from oil and gas sales
  • How to calculate and interpret financial performance metrics used to analyze the costs, profitability, efficiency, and value-added by a firm's exploration and production activities
  • How business combinations, joint ventures and non-monetary exchanges of oil and gas assets are accounted for

Who Should Attend?

• Financial accountants of US reporters in the upstream oil and gas industry
• Management accountants of US IOC’s and NOC’s partnering with US IOC’s
• Internal and external auditors of oil and gas companies reporting under US GAAP
• Staff of revenue authorities and NOC’s working with IOC’s reporting under US GAAP
• Financial analysts seeking to improve their understanding of the accounting by oil and gas companies

Course Outline

Introduction

• Development of US GAAP literature in relation to oil and gas
• Where to find the relevant Topics and reference sources

Presentation of financial statements

• Items to be included in the income statement
• Classification of items in the statement of financial position
• Chart of accounts

Full cost method – Regulation S-X Rule 4.10

• Non-drilling exploration costs
• Drilling exploration costs
• Development
• Depreciation, depletion, and amortization

Successful efforts method

• Non-drilling exploration costs
• Drilling exploration costs
• Development
• Depreciation, depletion, and amortization

Reserves and other disclosures

• Importance of reserves to the financial statements
• Definitions and classification
• Supplementary disclosure requirements relating to oil and gas producing activities required by SEC
• Other disclosures required by oil and gas companies
• Making use of reserves and other disclosures to assess the performance

Revenue recognition

• Recognition points for oil and gas sales
• Impact of the adoption of ASC 606
• Accounting for oil and gas imbalances

Additional major accounting issues for the oil and gas industry

• Capitalization of interest
• Environmental obligations
• Dismantlement, restoration and abandonment ("asset retirement obligations")
• Impairment

Business combinations

• Nature of combinations in the oil and gas industry
• Acquisition of business vs. acquisition of assets
• Acquisition accounting
• Treatment of goodwill

Joint venture accounting

• Nature of joint ventures in oil and gas upstream
• Accounting for joint ventures
• Equity method accounting and use of proportionate consolidation

Oil and gas conveyances

• Sources of reference
• Monetary and non-monetary exchange transactions
• Acquisitions of properties
• Asset swaps
• Unitisations and pooling of interests
• Farm in / farm-out transactions