The management accounting standards of the UK petroleum industry may well become the global industry standard. In a remarkably innovative and enterprising manner, the UK oil and gas industry has taken a world lead in promulgating industry-specific management accounting standards called Standard Oil Accounting Procedures (SOAPs). This proactive initiative should enhance efficiency in the industry by developing best practice in managerial accounting and serve as an exemplar of good practice, which other industry groupings may adapt to their own specific requirements.

During the past sixteen years, the prices of both oil and natural gas and of refined petroleum products have experienced considerable volatility. While predominant market forces affecting demand may be quite similar across today's integrated world market, public policies vary significantly. The purpose of this study is to determine whether differences in U.S. public policy and those in the rest of the world are reflected in the financial structures of oil firms operating within these environments. The research focuses on national differences in capital structure policy, dividend policy, working capital management, and systematic risk.

Director compensation issues are important, as the role of directors is to monitor managers on behalf of shareholders in the context of agency theory. However, recent research and real world anecdotes demonstrate that directors behave like friends of managers. In today's corporate environment, shareholders are supposed to take more action to monitor managers and directors. After the passage of the Dodd-Frank Act (2010), shareholder activism has been particularly more visible. This research aims to investigate director compensation issues in the oil and gas firms utilizing post-Dodd-Frank Act data. We focus on a single industry to understand better the determinants of external director compensation using current data.

This article addresses the question of how to fairly compensate directors of the oil and gas industry for their commitment when being faced with regulatory change and an uncertain economy.

Finding costs are commonly defined as the average costs of adding new proved reserves through drilling over some relevant time period. The disclosure of finding costs is not mandated by current accounting standards. Voluntary disclosures in 1990 range from less than one-third among majors, diversified companies, and pipeline and utility firms to approximately two-thirds among independents. This article reports on the voluntary disclosures found in the 1990 annual reports of sixty large oil and gas companies. The voluntary disclosures are not completely comparable, reflecting the lack of a current accounting standard.

In Canada, a new financial reporting standard has been issued which requires companies to estimate their clean-up costs and accrue a liability over the remaining period of production by a systematic and rational charge to income. This study explores the disclosure practices of Canadian oil and gas companies who must follow the new standard for clean-up costs.

This article reports the results of a follow-up study to a 1993 article in the Journal on disclosure of future removal and site restoration cost liability by Canadian oil and gas companies.

Mr. Avard reviews the results of interviews with 25 oil and gas analysts concerning disclosure requirements for oil and gas companies. He finds strong support for requiring proved reserve quantity disclosures, but (contrary to Professors Deakin and Deitrick in the immediately preceding article) finds only a slight majority favoring value disclosures, with no consensus of how value should be reported. He finds little support for the SEC's measure of performance based on changes in value.

The 1990 annual survey focuses on the financial reporting practices in the statement of cash flows, footnotes to the financial statements, supplemental oil and gas disclosures, and reports of management responsibilities. Forty-one companies examined used the full cost accounting method and fifty-nine companies used the successful efforts method.

The Financial Accounting Standard Board's Statement of Financial Accounting Standards No. 95 specifies that a Statement of Cash Flows be included in the complete set of financial statements. This article reviews those requirements and their application to oil and gas producing companies. Special attention is given to the "adding back" of expenditures for exploratory dry holes and other exploration costs by some companies in arriving at cash flows from operations. The impact of this "add back" on reported cash flows from operations and from investments activities is analyzed.

The authors have examined the prices of shares of stock and of units in royalty trusts formed by the eight oil companies forming royalty trusts traded on the New York and the American Stock exchanges. They conclude that stockholder values are enhanced by the creation of such trusts.

An overview of selective topics on doing business in China from an oil and gas perspective with the objective of preparing a company for the opportunities that the China oil and gas industry has to offer while avoiding the pitfalls along the way.

The domestic petroleum industry has been through perhaps the most difficult period in its history. This article reviews some of the more recent trends in the industry which suggest that the basis is being laid for an improved future. A review of governmental policies and the way that those policies could stall the recovery is also included.

Without relief from double taxation, very little foreign oil and gas exploration activities would take place. Mr. Anderson and Mr. Johnston discuss various ways that the U.S. and foreign governments address this issue .

Since the inception of the oil and gas industry, there has been an inherent conflict between the interest of mineral owners and landowners with regard to the use of the surface estate. The result is that many mineral owners and surface owners have little mutual interest in the development of the mineral estate, and the interest of the surface owner is in direct conflict with the mineral owners' surface use.

Oil and gas activities obviously take place where the oil and gas is located, and population growth and urban sprawl has brought the citizenry into close proximity with oil and gas wells. This development makes the understanding of local land use regulatory mechanisms important for all of the interested parties in oil and gas development-royalty interest owners, working interest owners, and surface owners. This is a two-part article which will conclude. in the Summer 2003 issue of the Journal.

This is the second installment of a two-part article which began in the Spring 2004 issue of the Journal. As sub-state governmental units become more active in regulating and/or prohibiting oil and gas drilling and production activities, the likelihood arises that there will be an increase in the amount of constitutional challenges filed. Just as the state may prohibit a property owner from operating a nuisance, a state may prohibit a mineral owner from engaging in activities that its ownership interest does not authorize.

This article addresses capital projects and infrastructure in the energy industry and how best to select, plan and execute projects with capital efficiency.

Of all the relationships affecting the financial well-being of oil and gas royalty owners, perhaps none is more important than the relationship between the royalty owner and the operator of the oil and gas properties. This paper provides a broad survey of the duties and obligations owed by operators to royalty owners, the sources of those duties, and a very brief discussion of certain recent developments concerning a few of those obligations.

Ms. Leeds has written an interesting account of the early days of the American Petroleum Industry. Much of her paper deals with development of different forms of transportation. Her discussion of the development of the oil and gas lease contract will be of special interest to petroleum accountants.

This study examines the accrual management pattern of oil and gas firms over a period of time that includes more than one significant political or environmental event. The authors focus on corporate response (through earnings management behavior) to different types of political or regulatory events of firms that belong to a different industry having unique disclosure practices, primarily those firms operating in the petroleum and natural gas producing industry.

This article discusses the economic impact of the Eagle Ford shale. The author also discusses opportunities for economic diversification, implications for the political landscape, potential funding sources for rural population shifts, and longevity of the Eagle Ford.

In this article Mr. Eldahrawy reviews the reasons why the future production of oil and gas each year is important in financial reporting. He then discusses the factors affecting the technical determination of production and the factors affecting economic determination of production. The opportunity cost of scarce resources, the opportunity cost of the maximum efficient rate of recovery. and the opportunity cost of the rule of capture are factors that determine annual production.

Contracts with some of the most complex fiscal structures utilize investor's rate of return (IRR) to control either the ongoing taxation rates or production shares imposed upon the petroleum companies. This article evaluates the performance of three such IRR. controlled contracts. Mr. Wood has worked in the global petroleum industry for many years; he is now deputy exploration manager for International Petroleum Corporation (IPC) in the U.K.

Changes in oil markets and the U.K. fiscal regime have had a significant impact on the economics of oil exploration and production activities in the U.K. This paper, which is extracted from a speech, addresses the highlights that these changed conditions have had on the economics of oil and gas exploration and production in Scotland.

Environmental awareness and pressures familiar to the oil and gas industry in the U.S. have become a global phenomenon. U.S. companies doing business abroad may minimize risks by taking a pro-active stance toward environmental issues when negotiating production contracts with foreign governments and government-owned petrochemical companies.

The purpose of this article is to provide an understanding of the economics of wind farms, defining what a wind farm is and then focusing on their development processes and cost structure, major areas of risk, and their financing and accounting challenges.

In the past ten years, the petroleum industry has rapidly become engaged in the exchange of various types of information through "electronic data interchange" programs. Mr. Robertson discusses the importance of legal considerations in exchange programs. He points out that in recent months a great deal of information, not previously available, about legal aspects of data interchange has become available.

The world of exploration and production utilizes the term "payout" routinely in calculating well economics. Payout may be defined as the point in a well at which the money recovered is equivalent to the money invested. Payout is calculated with the utmost care. Why are companies recalcitrant about calculating payout on software investments and other technology purchases? This payout phobia is not limited solely to technology spending; it also extends to professional education.

The Electronic Data Communications Special Committee was founded by the Council of Petroleum Accountants Societies in 1986. In this article the co-chairmen of that committee review certain electronic data communications that have been developed through the cooperative efforts of the petroleum industry and General Electric Company. These include the Petroleum Product Exchange Data System (PETROEX), the Automated Exchange Reconciliation (RECON), Crude Oil Data Exchange (CODE), Check Stub Data Exchange (CDEX), Gas Revenue Accounting Data Exchange (GRADE), Computerized Equipment Pricing Systems (CEPS), and Joint Interest Billing Exchange (JIBE).

Empirically investigates the impact of major international events on large U.S. oil and gas companies and discusses the results from the events. The author compares the impact on oil and gas companies relative to the entire stock market and on the price of oil.

This study focuses on non-financial variables to explain cross-sectional differences in the level of audit and non-audit fees. In an industry like oil and gas, with unique characteristics which distinguish it from other industries, non-financial factors as measures of future profit potential occupy a crucial role in the analysis of audit and non-audit fee determinants. The traditional financial variables may not be sufficient for firms operating in such industries. One has to look beyond those factors and consider variables that are non-financial or technical in nature to make a proper evaluation of audit/non-audit fee variations across firms.

Professor Eldahrawy has analyzed financial information and supplemental information required by SFAS No. 69 for 14 oil and gas companies that "failed" in the period 1980-1984. Certain relationships between financial data and/or reserve data were examined for each of the three years before the year of failure. These relationships were compared with identical relation ships for 14 "matched non-failed" firms. Eldahrawy concludes that SFAS No. 69 data are useful by themselves or as supplements to financial statements in assessing the financial position of an oil or gas company.

The event study considers the impact of the Persian Gulf War on oil price movements on the stock returns of 56 petroleum companies, including 22 integrated oil companies, 16 petroleum producers, and 19 oilfield service companies.

Effective tax rates for a sample of large oil companies based on the historical cost, constant dollar, and current cost bases for the years 1980 and 1981are examined. Messrs. Schneider and Putnam show that the effective tax rates based on current cost and constant dollar income are much larger than those based on historical costs.

This articles describes how one company (Cincinnati Gas & Electric Company) has been able to use spot market purchases to increase its profits. The authors then discuss how deficiency-based GICs and "demand-type" GICs will affect gas purchasing strategic and prices in the spot market.

Professors Purdue, Strickland, and Hemifar analyze the effects of announcements about the 1986 Tax Reform Act oil the returns (dividends plus market value changes) of 119 firms. They conclude that several announcement dates had significant impacts on industry returns.

The tax reform act of 1986 substantially revised a number of provisions for taxation of hard minerals. Investors in these operations need to consider the changes in tax law that will have an impact on their investment decisions. This article presents a decision model based on the revised tax provisions so that hard minerals investments may be guided by the most recent tax law.

World oil demands have been forecast to grow by 60% by 2030. This increasing demand, coupled with decreasing reserves, means that access to future oil supplies will be of enhanced concern to western governments from both a military and a political perspective. The ongoing conflict in Iraq, with its consequent impact on oil price rises and volatility, may be testimony to this concern. This article assesses the efficiency of international oil markets to assimilate US announcement information during conflict and non-conflict periods over an extended period of time.

Burke and Durand review the effects of IDC deductions on federal income taxes. on the minimum tax on preferences. and on the windfall profit tax prior to the passage of the Tax Equity and Fiscal Responsibility Act of 1942 (TEFKA). The provisions of TEFRA affecting LDC are discussed. The election given individuals in TEFRA to capitalize all or pan of otherwise deductible IDC is examined in detail. The authors then discuss and illustrate situations in which the taxpayer would be wise to capitalize pan of IDC. The use of EDP models in estimating the effects of IDC is then discussed.

COPAS has been very instrumental in the development of electronic data interchange programs in the oil and gas industry. These exchange programs have brought about tremendous changes in accounting procedures and in relationships between companies. Mr. Gear reviews a number of the most in port ant interchange programs now being used and addresses some of the most commonly expressed fears and concerns that accountants have about such programs.

Recently corporate failures and enactment of the Sarbanes-Oxley Act of 2002 caused companies to revisit their antifraud-related policies and procedures. As a consequence, companies expended substantial resources on strengthening internal controls and reducing the risk of fraudulent behavior by employees. However, the companies' implementation strategies largely ignore the premise that cultural differences influence employees' responses to potentially fraudulent situations. This study examines the link between culture and ethical decision making in the context of international oil and gas operations.

This article provides an overview of energy sources, the future of alternative energy and government regulations related to global warming or climate change.

The authors provide a general overview of lease accounting from the lessee and lessor's perspectives and applications to the energy industry.

The article discusses the key energy incentives posted last fall. Percentage depletion is made more available by increasing the income limit to 100 percent and by eliminating the transfer prohibition. The percentage depletion rare allowed on marginal production is increased potentially. A tax credit is authorized for enhanced oil recovery (EOR). An alternative minimum tax (AMT) energy preference deduction is provided for independent producers. Section 29 credits are extended on non conventional fuels and definitions are modified to make re-working older properties more profitable.

An examination of the evolution of enterprise risk management, the current status, and emerging trends.

Despite the petroleum industry's relatively good safety and environmental record, a recent public opinion poll reveals disturbing statistics regarding public attitudes toward environmental safety and the petroleum industry. Mr. Haddock weighs the benefits of costly environmental regulations against the costs and addresses the defects in the current regulatory system, as well as the difficulty of reforming the system. The author also discusses in some detail the American Petroleum Institute's STEP plan (Strategies for Today's Environmental Partnership).

Environmental laws and standards may result in costs which are—on either a company or industry basis—absolutely staggering. Accounting for current and estimated future dismantlement, restoration, and environmental reclamation costs raises issues which have perplexed accountants in the industry for decades. The objectives of this paper are to review some of the most prominent U.S. environmental legislation affecting the oil and gas industry, to discuss relevant accounting standards and concepts, and to examine the latest events in the evolution of standards for financial accounting and reporting of current and future environmental costs.

Properly developed accounting systems can be employed to mitigate, if not entirely avoid, crisis events. This paper describes and illustrates a vital mechanism in establishing an appropriately tailored crisis accounting system, namely the environmental audit.

Tightening government oversight of environmental performance and compliance by natural resource firms has underlined the necessity of developing effective intra company environmental management systems. The why involve voluminous and Complex regulations, increasingly stringent enforcement, corporate goodwill, risk management, and international concerns.