Day 1: Background and Accounting Frameworks

Introduction to Accounting Frameworks for Oil & Gas

In this section, we will delve into the fundamental concepts of accounting frameworks in the context of the oil and gas industry. We'll explore the key principles that underpin financial reporting in this sector.

Understanding the upstream value chain

To better understand the industry, we'll break down the upstream value chain. This will provide insights into how oil and gas are sourced, extracted, and processed, setting the stage for accounting considerations.

Comparison of financial reporting frameworks (IFRS vs. US GAAP)

Here, we'll examine the two primary financial reporting frameworks, International Financial Reporting Standards (IFRS) and US Generally Accepted Accounting Principles (GAAP), highlighting their key differences and their impact on financial statements.

Differentiating between full cost and successful efforts methods

We'll explore two accounting methods used in the industry: full cost and successful efforts. Understanding the distinctions between these methods is crucial for financial reporting accuracy.

Exploring Partnering Arrangements and joint ventures

Oil and gas companies often engage in partnering arrangements and joint ventures. This section will discuss the nuances of these collaborations and their accounting implications.

Key aspects of the Joint Operating Agreement

Joint Operating Agreements (JOA) are central to many oil and gas operations. We'll break down the crucial components of a JOA and how they affect accounting procedures.

Case study: Identifying accounting issues in different contractual arrangements

To put theory into practice, we'll analyse real-world contractual arrangements in the oil and gas industry, highlighting common accounting challenges and solutions.

Day 2: Drilling & Development

Well classification and cost treatment

This section will focus on how wells are classified and the accounting treatment of costs associated with drilling and development activities.

Accounting for dry holes and impairment testing

Dry holes can be costly, and impairment testing is a crucial accounting aspect. We'll discuss the accounting procedures for these scenarios.

Comparison of US GAAP and IFRS differences

We'll provide an in-depth comparison of the differences between US GAAP and IFRS in the context of drilling and development accounting.

Case study on initial and subsequent accounting for drilling and non-drilling costs

Through a case study, we'll examine the accounting procedures for both initial and subsequent accounting for drilling and non-drilling costs.

Capitalisation of Borrowing Costs and estimating rates

This section will delve into the capitalisation of borrowing costs and how rates are estimated, impacting financial statements.

Decommissioning Costs: Recognition, measurement, and changes

The decommissioning of oil and gas assets is a significant concern. We'll explore how these costs are recognised, measured, and the changes in accounting treatment.

Case study on decommissioning cost estimation and accounting

A case study will illustrate the complexities of estimating and accounting for decommissioning costs, shedding light on best practices.

Day 3: Accounting Issues during Production

Measuring production costs

Production costs are critical for profitability assessment. We'll discuss the various methods used to measure these costs accurately.

Treatment of inventories

In this section, we'll cover the accounting treatment of inventories, including valuation and its impact on financial statements.

Allocation of production costs

The allocation of production costs can be intricate. We'll break down the methods used and their implications.

Depreciation, depletion & amortisation methods

Understanding the depreciation, depletion, and amortisation methods employed in the industry is essential. We'll provide a comprehensive overview.

Impairment testing for production assets

Impairment testing for production assets is a critical accounting procedure. We'll explore the methodology and its importance.

Joint Arrangement Accounting responsibilities and funding

Joint arrangements are common in the oil and gas sector. We'll discuss the accounting responsibilities and funding structures involved.

Preparation and accounting for JV billing statements

Preparing and accounting for joint venture (JV) billing statements is a fundamental aspect of the oil and gas industry. We'll provide insights into best practices.

Day 4: Revenue Recognition and Reserves Estimation

Overview of IFRS 15 for revenue recognition

IFRS 15 governs revenue recognition in the oil and gas sector. We'll provide an overview and its impact on financial statements.

Measurement of oil and gas revenues

Understanding how oil and gas revenues are measured is pivotal for accurate financial reporting. We'll delve into the intricacies.

Accounting for revenue imbalances and royalties

This section will cover the accounting treatment of revenue imbalances and royalties, including their impact on financial statements.

Distinguishing acquisitions of assets and businesses

Distinguishing between acquisitions of assets and businesses is crucial for accurate financial reporting. We'll discuss the differences and implications.

Accounting for farm-ins, farm-outs, and carried interests

The accounting for farm-ins, farm-outs, and carried interests can be complex. We'll provide insights into these arrangements and their accounting procedures.

Reserves Estimation and Disclosure definitions and use

Reserves estimation is a central concept in the industry. We'll explain its importance and its role in financial disclosure.

Calculating and analysing reserves ratios for supplemental disclosure

To wrap up, we'll discuss the calculation and analysis of reserves ratios for supplemental disclosure, providing a comprehensive understanding.

These highlights provide an overview of the key topics covered in the course, making it easier for participants to understand the content at a glance.

In this 4-day course on oil and gas accounting, you will gain comprehensive insights into various aspects of the industry. Here's what you can expect to learn:

Day 1: Background and Accounting Frameworks

• Understand the fundamental concepts of accounting frameworks in the oil and gas sector.
• Explore the upstream value chain, from sourcing to processing.
• Differentiate between IFRS and US GAAP financial reporting frameworks.
• Learn about the full cost and successful efforts accounting methods.
• Gain insights into partnering arrangements and joint ventures.
• Understand key components of Joint Operating Agreements (JOA).
• Analyse real-world accounting challenges in contractual arrangements through a case study.

Day 2: Drilling & Development

• Learn how wells are classified and how drilling and development costs are accounted for.
• Understand the accounting treatment of dry holes and impairment testing.
• Compare US GAAP and IFRS differences in drilling and development accounting.
• Analyse a case study on initial and subsequent accounting for drilling and non-drilling costs.
• Explore the capitalisation of borrowing costs and rate estimation.
• Understand the recognition, measurement, and changes in decommissioning costs.
• Gain practical insights into decommissioning cost estimation and accounting through a case study.

Day 3: Accounting Issues during Production

• Discover various methods used to measure production costs.
• Understand the accounting treatment of inventories and their valuation.
• Learn about the allocation of production costs and its implications.
• Explore depreciation, depletion, and amortization methods.
• Understand the importance of impairment testing for production assets.
• Learn about the accounting responsibilities and funding in joint arrangements.
• Gain insights into the preparation and accounting for joint venture (JV) billing statements.

Day 4: Revenue Recognition and Reserves Estimation

• Get an overview of IFRS 15 for revenue recognition and its impact.
• Understand how oil and gas revenues are measured accurately.
• Explore the accounting treatment of revenue imbalances and royalties.
• Learn to distinguish between acquisitions of assets and businesses and their implications.
• Gain insights into the accounting for farm-ins, farm-outs, and carried interests.
• Understand the importance of reserves estimation and its role in financial disclosure.
• Learn how to calculate and analyse reserves ratios for supplemental disclosure.

By the end of this 4-day course, you will have a well-rounded understanding of oil and gas accounting, including the industry's unique financial reporting frameworks, drilling and development accounting practices, production cost management, revenue recognition, and reserves estimation. This knowledge will equip you with valuable skills and insights for working in the oil and gas sector or related financial roles.