Oil & Gas Accounting & Performance Measurement

OBJECTIVES

• the meaning and significance of financial reporting policies and practices adopted by E&P companies
• how to provide relevant financial information on E&P activities that meets the needs of users and complies with financial reporting standards
• how to develop and use key performance indicators (KPIs) to continuously improve performance within their organization
• how to compare the business performance of companies in the E&P industry

WHO SHOULD ATTEND?

This program is designed specifically for all who work with financial information and measures of performance for Oil & Gas Accountant.

COURSE OUTLINE

Accounting for Exploration and Evaluation

The E&P Industry and Financial Reporting

• Oil and gas reserves
• Joint ventures and production sharing contracts
• Regulation of E&P financial reporting

Pre-development costs

• License, geological and geophysical costs
• Exploration and evaluation drilling costs
• Successful efforts and full cost methods
• Cash-generating units

Accounting for Development and Production

Development Costs

• Development drilling costs
• Facilities costs
• Borrowing costs

Production Costs

• Operating costs
• Royalties
• Cost of sales

Depreciation of Capitalized Costs

• Unit-of-production method
• Matching costs with reserves
• Changes in costs and reserves
• Other methods used by E&P companies

Impairment of Assets

• Indications of impairment
• Estimating value in use
• Accounting for impairment

Advanced Issues in E&P Accounting

Sales Revenues

• Revenue recognition
• Long-term gas contracts
• Entitlements and lifting's
• Shared pipelines

Commitments, Contingent Liabilities and Provisions

• Recognition and reporting
• Disclosure requirements
• E&P examples

Removal and Restoration

• Costs requiring provision
• Measuring the amount of provision
• Accounting for removal and restoration costs
• Funding of removal and restoration costs

Mergers, Acquisitions and Disposals

• Company mergers and acquisitions
• Acquisitions and disposals of oil and gas interests

Risk and Cost Sharing; Performance Management

Risk and Cost Sharing Arrangements

• Joint ventures
• Production sharing contracts
• Farm outs
• Carried interests

Performance Management

• The balanced scorecard
• Performance contracts
• Critical success factors
• Continuous improvement

Key Indicators of Financial Performance

• Return on capital employed
• Total shareholder return
• Potential for share price appreciation
• Ability to reinvest
• Oil price and profitability
• Net income per barrel produced

Key Indicators of Capital Expenditure

• Capital expenditure trends
• Capital investment ratios

Key Indicators of E&P Performance

Pre-production Performance Indicators

• Properties held for exploration
• Exploration and development activities
• Drilling time, depth and cost
• Exploration success rates
• Finding and development costs

Reserve Quantities and Measures

• Reserve quantity disclosures
• Effects of clauses in PSCs
• Reserve replacement and growth

Production Performance Indicators

• Production rates and costs
• Rate and growth of production
• Production costs per barrel
• Cost effects of rates of production
• Maintenance activity and costs
• Comparing assets and installations

Support Activities

• Measures of support activity performance
• Examples in Finance, Human Resources and Information Systems
• Support cost ratios

Health, Safety and Environment

• Monitoring HSE performance
• Accidents and incidents
• Flaring, spills, releases to air and water
• Community development
• Sustainability reporting
• Extractive Industries Transparency Initiative