A short report that explains what the Extractive Industries Accounting Research Institute does at North Texas State University.

A Report from the Extractive Industries Accounting Research Institute. Fall/Winter 1983, pp. 5‑6.

Developments in oil and gas accounting over the past four months including SEC Pronouncements, SEC Releases No. 33-6483 and No. 33-6484, COPAS publications, AICPA Auditing Standards Statement, Dallas Petroleum Accountants Studying International Operating Agreements.

Current Developments. Fall/Winter 1983, pp. 7‑10.

In the past year the decline in demand for natural gas has caused the effectiveness of many take-or-pay contracts to be called into question. The authors review the economic events that Jed to rapid growth in the number of such agreements and that have since caused many of them to be dishonored or challenged. Then, Messrs. Grier and Miglicco analyze the accounting problems for both producers and purchasers arising from the economic circumstances.

Take-or-Pay Contracts. Grier, James D. and Miglicco, Gary J., Fall/Winter 1983, pp. 11‑20.

Dr. Porter reviews the nature of both carved-out and retained production payments. Then he explains the appropriate accounting treatment to be given both types of payments under different circumstances by both the operator of a property subject to a production payment and by the owner of the payment. Differences in the accounting required by full cost companies and by those using the successful efforts method also are pointed out.

Accounting for Production Payments. Porter, Alan, Fall/Winter 1983, pp. 21‑34.

In this article Mr. Chaffin examines the role that the stage of development of a coal mine should play in determining the proper accounting treatment of costs incurred. He discusses both the theoretical considerations and industry practices. He concludes that a coal company should recognize four stages in the life cycle of a mine-exploration, development, production, and mine closing-and that the stage in the cycle should play a dominant part in accounting decisions.

Stages in the Life Cycle of a Mine. Chaffin, Andrew L., Fall/Winter 1983, pp. 35‑50.

Mr. Lee discusses the nature of "gas balancing arrangements" and specific points that should be included in such agreements. He reviews the deferred sales accounting approach that might be used by both parties in recording imbalances. In addition he explains the use of exchange agreements in handling imbalances.

Accounting for over/under Deliveries of Gas. Lee, R. Dean, Fall/Winter 1983, pp. 51‑58.

Messrs. Nigg and Keeling review the computation of the government royalty from U.K. oil and gas production and how the royalty may be accounted for. They then analyze the Petroleum Revenue Tax, including the advanced PRT, suggesting appropriate methods to account for the tax. Finally they summarize the Corporation Tax and discuss the proper accounting treatment to be given to it.

Accounting for United Kingdom Taxes on Oil and Gas Producing Activities. Nigg, Dudley and Keeling, Peter, Fall/Winter 1983, pp. 59‑84.

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.

The Use of Special Allocations in IDC in Oil and Gas Partnerships. Hennessee, Patrick; Armstrong, David; and Weber, David, Fall/Winter 1983, pp. 85‑96.

Dr. Avard reports on his continuing research into the use of accounting disclosures by oil and gas financial analysts. He concludes that analysts perceive the disclosures of reserve quantity and standardized measure required by FASB Statement No. 19 to be useful, although they showed little interest in the schedules of costs incurred and of capitalized cost.

Oil and Gas Disclosures—Analysts' Perceptions of Usefulness. Avard, Stephen, Fall/Winter 1983, pp. 97‑104.

Dr. McCarty concludes that management estimates of estimated future net revenues from the production of proved oil and gas reserves (required by the SEC as a "disclosure" for years ending after December 25, 1979, and before December 25, 1982) may not be sufficiently reliable to justify their required disclosure.

An Analysis of the Reliability of Management Estimates of Expected Future Net Revenues from the Production of Proved Oil and Gas Reserves. McCarty, Thomas M., Fall/Winter 1983, pp. 105‑116.

The SEC has announced new rules to be followed by full cost companies for years ending after December 15, 1983, in computing amortization. The rules permit the general exclusion of all unevaluated costs from immediate amortization. In addition more specific disclosures of the category and age of such excluded costs are required. Because of its importance, the complete text of the release is reproduced.

SEC's Oil and Gas Producers-Full Cost Accounting Practices; Amendment of Rules. Securities and Exchange Commission, Fall/Winter 1983, pp. 117‑128.

The SEC has modified its proposed rules for recognition of gain or loss on sales and other transfers of oil and gas producing properties. The proposed rules would generally eliminate income recognition in connection with sales or other conveyances of oil and gas properties. The entire text of the proposed rules is reproduced for the convenience of our readers.

SEC's Oil and Gas Producers-Full Cost Accounting Practices; Proposed Amendment of Rules. Securities and Exchange Commission, Fall/Winter 1983, pp. 129‑136.

Short summaries of the articles in this journal.

Review of Current Literature. Campbell, Alan D., Fall/Winter 1983, pp. 137‑139.