A number of oil and gas accounting questions have been transmitted to the Research Institute in recent months. Suggested answers to these questions have been prepared by various individuals who are well versed in the accounting problems of the oil and gas industry.

The Accounting Forum. Summer 1984, pp. 5‑22.

Should the company "write down" the book value of the rigs? If so, to what amount?

Decline in Value of Drilling Rigs. Porter, Alan, Summer 1984, pp. 5‑7.

How should the company compute depreciation on the idle rigs, if at all?

Depreciation of Idle Drilling Rigs. Porter, Alan, Summer 1984, pp. 7‑7.

In restating its financial statements at the time of the change of accounting method on January 1, 1985, may the company restate on the basis of excluding all unevaluated costs? If not, what restatement basis can be used that most nearly approaches the SEC's exclusion rule permitting such costs to be excluded?

Treatment of Amortization Exclusion in Change from Successful Efforts Accounting to Full Costing. Porter, Alan, Summer 1984, pp. 7‑9.

In late 1983, the pipeline curtailed taking the minimum quantity of gas from the producer and also refused to pay for any gas not taken. What accounting treatment should be given to Company P to these facts?

Curtailment of "Takes" under "Take or Pay" Contracts. Porter, Alan, Summer 1984, pp. 9‑10.

Should the auditor insist on applying a ceiling to capitalized costs? If so, what would be the logical approach (or approaches) to computing a ceiling, based on the facts given?

Ceiling on Capitalized Costs for Non-Public Company Using Full Costing. Porter, Alan, Summer 1984, pp. 10‑15.

How should the cost of CO2 injectants used in enhanced recovery projects be accounted for?

Treatment of CO2 Injectants in Enhanced Recovery Projects. May, E.S. and Pearson, H.O., Summer 1984, pp. 16‑17.

Should these G & G costs be included in the full cost amortization pool?

Exclusion of Pre-Acquisition Costs from Full-Cost Amortization. Grinaker, Robert L. and Pearson, Della, Summer 1984, pp. 18‑22.

In May 1984, the SEC amended its rules for profit recognition by full cost entities. Mr. Ridenour examines the application of these rules as they apply to gains and losses on sales and other conveyances of properties, management fees and other promotional fees, and service contracts.

The New SEC Rules for Full Cost Companies; Drilling Arrangements, Management Fees and Service Contracts. Ridenour, P. Dean, Summer 1984, pp. 23‑26.

In his article Mr. Luke discusses managerial decisions involving a company's acquisition of oil and gas properties from other operators. Such factors as why producing properties are acquired, factors to be considered in planning for an acquisition, criteria to consider in selecting properties, methods used to compute value of reserves, and acquiring an entire company are considered.

Negotiating Producing Property Acquisitions. Luke, Norman J., Summer 1984, pp. 27‑38.

In September 1983, the SEC amended its rules relating to the exclusion of unevaluated costs in calculating amortization of the full cost pool. This survey of a limited number of oil and gas company and public accountants seeks to gather interpretations of certain aspects of the new rules.

Applying the New Full Cost Exclusion Rules. An Extractive Industries Accounting Research Institute Survey, Summer 1984, pp. 39‑52.

Mr. Boldt, Associate Director for Royalty Management of the U.S. Department of Interior, describes changes that have been made to make the Royalty Management Program more efficient and understandable. He discusses the new royalty accounting systems, operation of the audit function for royalty interests, the problem of product valuation, and new legislation relating to royalty management.

Federal Royalty Management—A New Approach. Boldt, Robert E., Summer 1984, pp. 53‑58.

In this article Messrs. Wilson and Sparger give an overview of federal well-head price controls and examine the phased decontrol provisions of the Natural Gas Policy Act of 1978. The situation that will exist in gas price regulation on January 1, 1985, is then examined.

Phased Decontrol: The NGPA on January 1, 1985. Wilson, John L. and Sparger, J. R. (Bob), Summer 1984, pp. 59‑68.

Mr. Boyle classifies oil taxes as entry taxes, event taxes, and exit taxes. He then analyzes the various oil taxes in the United Kingdom, the Netherlands, Denmark, and Norway. He then ranks the countries in the order in which exploration risk is most reduced by taxes.

Oil Taxation and the North Sea. Boyle, Anthony, Summer 1984, pp. 69‑74.

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.

Economic Implications for Oil and Gas Disclosure Requirements. Eldahrawy, Kamal, Summer 1984, pp. 75‑82.

The authors have analyzed the "market impact" on gas producing companies of passage of the Natural Gas Policy Act of 1978. They conclude that the impact of passage of the law on shareholders of natural gas production, transmission, and distribution companies was negligible at most.

The Impact of Deregulation on Natural Gas Firms: An Empirical Study. Davidson III, Wallace; Chandy, P.R.; and Walker, Michael, Summer 1984, pp. 83‑96.

In recent years several studies have been made of the usefulness of oil and gas reserve disclosures in published financial statements. One question that has been raised and studied in several research projects is the reliability of estimates. In this article Mr. Campbell discusses the results of his research project, evaluating the direction and magnitude of revisions in reserve estimates. Mr. Campbell's focus is on whether reserve estimates are negatively or positively biased.

An Analysis of Bias and Reliability in Revisions of Previous Estimates of Proved Oil and Gas Reserve Quantity Information: Replication and Extension. Campbell, Alan D., Summer 1984, pp. 97‑114.

In this research article Mr. Jones reports on a survey of accounting practices of successful efforts companies in situations where the company, the operator in a joint interest, uses drilling rigs on which it is paying excessively high rental rates under long-term contracts.

Charging Joint Interests for Excess Drill Rig Rental Cost-Successful Efforts Companies. Jones, Donald M., Summer 1984, pp. 115‑118.

In this article Ms. Kingery discusses some of the procedures, reports, and forms that are used by oil purchasers to measure and report oil and gas production. These include state regulatory agency reports, tables used to measure oil at standard gravity and temperature, and division orders.

One Truck Load of Crude Oil—Measurement and Reporting Procedures. Kingery, Carolyn, Summer 1984, pp. 119‑138.

The full text of the SEC's May 1984 release amending the Commission's rules on recognition of gain by full cost companies is reproduced.

Securities and Exchange Commission—Final Rules for Recognition of Gain or Loss on Property Conveyances and on Management Fees and Service Income. Securities and Exchange Commission, Summer 1984, pp. 139‑145.