Oil & Gas Accounting & Performance Measurement
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