US GAAP for Upstream (E&P) Oil and Gas (3 days)

Introduction

The complexities of accounting for oil and gas companies require an ability to properly interpret and comply with the accounting requirements that are applicable to this industry's unique issues. This three-day course focuses on ASC 932 providing an understanding of US GAAP accounting principles and standards that are specific to the upstream oil and gas industry; shows how to apply these accounting rules; discusses financial reporting requirements for upstream companies whose stock is traded in the U.S. including both majors such as Exxon Mobil and minor stocks; discusses the importance to financial reporting of reserves definitions; shows where to find in corporate reports a wide variety of data and metrics relating to the performance of oil and gas firms; illustrates financial analysis of oil and gas firms.

The course is designed to guide you through the terminology and concepts relating to oil and gas accounting. You will also receive familiarity with SEC Oil & Gas Modernization Act and an overview comparing US GAAP with IFRS principles.

In this course, 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
• Which methods of depreciation to apply to producing properties
• How to account for impairment and asset retirement obligations
• How to recognise 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

Learning Objectives

• 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

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

Topics

• 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 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 a 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

Teaching Method

• Group live instruction, cases, examples, group work, open discussions
• Description and explanation of oil and gas accounting and financial analysis in clear and simple language
• Use of case studies and real-world examples to illustrate practical application of the standards and analysis techniques
• Interactive participation is encouraged
• All participants receive a comprehensive binder containing copies of the presentation slides, handouts and other course materials

Instructors

Venue

CPE/CPD Accreditation

IASeminars is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org.

 

Field of study: Accounting

Prerequisites

Understanding of basic accounting principles based on any national standard. No advance preparation is required for this course.