The international petroleum industry offers substantial rewards and equally substantial challenges. Overseas exploration, production, and development potential is dramatically better than US prospects. The key differences lie in the geopotential and in negotiating the fiscal terms of a production sharing contract.

Increasingly, cyber criminals are targeting oil and gas companies to lift intellectual property (IP), sabotage websites, harm reputation, and disrupt production. This article discusses the cybersecurity risk, related changes in the oil and gas industry and how organizations can minimize the consequences should such risk materialize.

Should Company A account for any portion of $10 million in 1984 if well is not completed prior to publishing the year-end financial statements? Who should account for that portion of the cost in 1984 if the well was actually completed and tested as dry prior to issuing the year-end financial statements?

Although the drilling window for Section 29 tax credits has closed, some producers are still trading these now worthless credits to unwitting buyers.

Sixteen years have passed since the 1973 energy crisis. Despite the turmoil of that period, it appears that few guidelines are in place to prevent a recurrence of the crisis period. Indeed, given the declining production and increasing demand which characterize today's energy scene, it appears we are headed towards a repeat of the past. This article reviews parallels between then and now and suggests steps which need to be considered to avoid a repeat of past errors.

This article addresses U. S. energy consumption, supply, concerns, solutions and policies.

When undertaking international oil and gas ventures, U.S. companies must take care to establish the optimum tax structure, one which takes into consideration both the taxation system of the country where the investment is to be made, as well as the tax status of the entity entering into the investment. The complexities are immense, but so are the stakes.

To succeed in the global oil and gas industry, US oil companies must consider the dual impact of US and foreign tax regimes on their investment opportunities and select projects that maximize revenues—given the project's geological and economic constraints—and offset or minimize the net effect of the two taxing authorities.

This article reviews the U.S. tax law relative to Americans working in Russia, including the U.S./Russia tax treaty and the U.S. and Russian social security systems. Mr. Anderson has sixteen years of experience in all phases of financial accounting and tax compliance with an emphasis on complex corporate and partnership accounting and taxation matters. He has been the director of the tax department at Hein + Associates in Houston since 1987.

A discussion of the various aspects of the Marketable Condition Rule and unbundling of producers' federal royalty payments that midstream companies should know.

A discussion of the growing risk of unpaid amounts associated with suspended and/or unknown owners which creates “unclaimed property” for a company which must be reported to various states after statutorily defined periods of time have elapsed.

This article addresses the broad impact of low oil prices on global oil trading. In particular, it highlights Six Core Trends shaping the oil trading sector in the last 12 months.

Addresses the broad impact of low oil prices on global oil trading; in particular, it highlights Six Core Trends shaping the oil trading sector in the last 12 months.

The author discusses what the Internet of Things includes, and current and future applications as they apply to the oil and gas industry as well as other areas of health and science.

After only one year, Alaska's new governor is calling for a special legislative session to review the petroleum profits tax (PPT). The PPT legislation is not performing as expected—government revenues are significantly lower than what was forecast.

The master limited partnership (MLP) has long been a popular corporate structure for energy companies with midstream assets. But increasingly, the master limited partnership structure is getting a second look from the upstream sector. This article discusses the reason for the resurgence in popularity, the benefits for sponsors and investors, reducing the risks and managing the complexities.

In this article, which can be thought of as a primer for non-IT staff, five software trends and strategies that can help upstream companies operate more efficiently are presented. Five customer success stories are also featured to show how E&P firms are benefiting from these strategies today and helping change the status quo for tomorrow.

This article takes a top level look at the accounting and reporting issues relevant to reporting entities in the oil and gas industry and provides an overview, by selected accounting area, of where the standards are similar, where they diverge, and any current convergence projects.

Catastrophic oil tanker spills have made headlines over the past few years. One study reported that, of 78 spills resulting from the ships' grounding, colliding, or ramming, 35 were at least indirectly due to the crews operation of the vessel. This paper discusses employment contracts currently used to remunerate ship captains and then applies the analytical results of agency theory research to develop employment arrangements that could reduce the likelihood of an oil spill.

As part of a continuing series in the Institutes' study of the utility of finding cost data, Dr. Boone evaluates the use of finding costs by investment analysts and the association between finding costs and subsequent earnings.

The first installment of a two-part article focuses on what the executive, legislative, and judicial branches of state government can do to increase the competitiveness of domestic oil exploration and production. The authors address the key problems that discourage domestic E&P and discuss what the governments of oil-producing states might do to reverse this trend.

This is the second installment of a two-part article on the use of law in the promotion of domestic exploration and production. The authors focus on problems that are within the power of the various branches of individual state governments to address: fractionalization, subdivision, and the absence of early field-wide unitization and contend that a comprehensive regulatory approach will increase the competitiveness of domestic operations. They also argue that state officials who share the goal of promoting domestic exploration and production must recognize the serious nature of these problems and be willing to take courageous, creative, and decisive action. The first installment appeared in the Fall/Winter 1999 issue of the Petroleum Accounting and Financial Management Journal.

The authors review the intent of Internal Revenue Section 704, the related existing Regulations, and the Proposed Regulations under Sec. 704(b) issued in March 1983. The authors then summarize case law relating to the allocation problem, concluding that the Proposed Regulations may clarify some controversies but will create controversies in other areas.

Information available in public records of major oil companies can be used to evaluate the environmental accountability of a firm and, thereby, provide concerned investors with a means of influencing the environmental consciousness and behavior of a business.

Can the cost of the gathering lines be considered marketing costs and be used when determining the value upon which to pay royalty?

This articles analyzes the financial performance of 25 oil and gas firms (majors, minors, and independents) from 1986-1995 using the Altman bankruptcy model as a barometer.

Although the greater availability of electronic data has made access to information easier, the accurate interpretation of data remains a challenge to market analysts. There is no single tool, web site, or data source that will determine the reasonableness of royalty payments under the mineral lease or production payments under the joint operating agreement. Regardless of the standard that will be used to evaluate the reasonableness of payments for oil and gas, the starting point for any comparison must be a compilation of the amounts that have been paid.

The authors discuss what the fair market value of a trust's oil and gas assets is when there is indirect and fractional ownership as well as a lack of marketability. The authors outline the rationale of the California oil and gas valuation decision and provide some observations.

The value of an exploration and production company is primarily dependent upon its oil and gas reserves, its anticipated production, forecasted commodity pricing, and operating and development costs. The authors discuss the unique company factors which, along with contemporaneous market conditions, team to form the foundation of any oil and gas company valuation.

This article examines the critical royalty provisions of the Bureau of Indian Affairs and explores the factual and policy differences underlying the treatment of federal and Indian oil and gas leases. The author provides a history of the relationship between Indian tribes and the U.S. and discusses the implications of the Supron decision.

Where do the states stand in the nation-wide debate on the valuation of oil and gas for royalty purposes? Do they follow the lead of industry or the federal government? Increasingly, states tired of waiting for the federal government to make up its mind Care leading the debate on valuation.

Proved reserve estimates—the heart and soul of US reserve disclosures—are by design conservative. Yet companies make huge investment decisions based on something other than proved reserves. How much are reserves in the ground worth?

Drs. Wright and Berry investigate the value relevance of reserve quantity disclosures. Specifically, this study explores whether the market distinguishes between the value relevance of disclosures reporting reserves of crude oil and reserves of natural gas.

A study of the value-relevance of GAAP and non-GAAP accounting measures commonly used by oil and gas company financial analysts in predicting future cash flows. Such prediction information can be used in investment decisions.

In this paper, the authors discuss research on the motivational aspects of linking employee rewards to the achievement of budget targets, and how the relationship between performance and rewards can lead employees to engage in deceptive behaviors. The authors also make suggestions for improving the planning process in ways that help relieve pressures on employees to behave in ways that are contrary to the overall economic well-being of the firm.

Market-oriented transactions have replaced long-term contracts with contracts that resemble retail agreements involving purchase orders and flexible pricing. Purchasers are no longer primarily pipelines. As a result of major regulation changes, pipelines now transport more gas owned by others than gas held for resale by the pipeline. Gas produced and available for sale or purchase can no longer be totally equated to the actual sale or purchase of natural gas. Spot sales and open access transactions introduce a new variable--volume imbalances. The article discusses nomination; confirmation; volume measurement; volume allocation using pro rata, swing, balancing, and entitlement methods; and invoicing. The types of volume imbalances and the roles of different Industry participants is examined.

The authors reviewed companies' annual reports, 10K filing, pro-filings, and information releases to identify the existence, nature, and scope of voluntary disclosures of finding costs. Included is a bibliography of articles and books on the finding costs issue.

Frank Pitts, one of America's visionary independent producers, suggests that the future is bright for the oil and gas independent who has courage and is willing to take advantage of the opportunities offered, especially in gas production and marketing. Mr. Pitts calls for independents to embrace reasonable environmental standards and to utilize new technological developments that make exploration, development, and production more efficient. He concludes that those "independents with vision are going to discover new and profitable horizons in the 1990s."

Changes brought about by deregulation and the changing cost structure of finding natural gas versus the finding and producing of oil suggest that the next century will be the century of natural gas, Jeff Skilling, CEO of Enron Gas Sciences Corporation, discusses the underlying economics of natural gas and explains why he foresees very significant changes in the industry in the future.

You've just been handed a mineral lease by someone who represents an energy company, but you haven't a clue as to what most of the words mean. This article attempts to clear away a bit of the mystery and make a dent in understanding what really is in a lease.

It is of benefit to all parties concerned to understand the contents, rights, and obligations incumbent in a lease. The mineral owner benefits by being able to get a better deal for his or her minerals. The energy company benefits by understanding what is most important to the mineral owner, which may save it a lot of time, money, and legal fees during the leasing process. This articles concludes a two-part series designed to make that experience a little less frightening.

This article addresses the issue of when insurance proceeds from environmental pollution claims may be deferred from gross income. When companies successfully obtain judgements or settlements through their comprehensive general liability (CGL) insurance for remediation costs, the income tax consequences are usually straightforward. However, environmental matters are seldom straightforward.

First principles of both tax planning and economic arrangements for the joint development of oil and gas properties are based on risk sharing. The party that pays for the lease expects to bear the economic burden of depletion and worthlessness and to be allocated the tax deductions associated with these economic consequences. On the other hand, the party that pays for the cost of drilling the well expects to bear the economic risk of a dry hole and to deduct the intangible drilling and development costs. Each party expects the allocation of economic benefits and burdens agreed to in the joint operating agreement to be respected for tax purposes.

Acceptance of the inevitability of gas imbalances has given rise to the current solution: gas balance agreements. Mr. Farrar asks the reader to reconsider the mental model for dealing with gas imbalances from solving the problem after the fact to avoiding imbalances in the first place and argues that compulsory takes is one alternative the industry should carefully consider.

Ms. Nance reviews the dividend-paying patterns of thirty-one large publicly-traded oil and gas companies for the years 1970-1984. Her study suggests that these companies do seek to maintain steady or constantly increase dividend payments. Dividends tend to be constant even though earnings may be quite volatile.

In this article Mr. Mark analyzes the requirements contained in the recently issued IRS Final Regulations governing reporting procedures for the windfall profit tax. Mr. Mark explains the rationale of the requirements and points out potential problems that may arise under the Regulations.

Mr. Campbell points out that the windfall profit tax is generally considered to be an excise tax, but that some state governments contend that the WPT is a Federal income tax (and thus not deductible in arriving at the state income tax). Mr. Campbell argues that the WPT is clearly a Federal excise tax, supporting his argument by reference to various sources.

Recently, the SEC further highlighted the importance of diversity in corporate governance by requiring firms to disclose how they evaluate candidates for positions on their boards of directors. This study investigates the extent of board gender diversity among energy firms in the aftermath of the SEC's disclosure requirement.

This paper examines the representation of women among corporate directors in the energy industry in the wake of the SEC's implementation of the financial expert requirement.

The newly formed Gas Industry Standards Board hopes to enhance the reliability of natural gas service through the establishment of electronic communication standards for business transactions within the gas industry.