This course aims to raise to an intermediate level your knowledge and understanding of E&P finance and accounting concepts. International practices and current developments across a range of relevant topics will be examined.

On completion, you will be able to constructively challenge and advise colleagues, helping improve accounting and budgeting practices and procedures: adding value and delivering commercial success.

What you will learn

• Knowledge of financial accounting and reporting issues unique to the E&P industry
• Understanding of accounting requirements resulting from joint ventures (JV)
• Production sharing accounting
• Financial planning and budgeting

Topic 1 - Financial accounting

What you will learn

This initial segment of the course will enhance your knowledge of the financial accounting and reporting issues which are unique to exploration and production, including comparisons between international, UK and US standards and practices. You will also analyse examples from E&P company accounts and study the impact of adopting different accounting policies.

Topics covered include:

Regulation of oil and gas company accounting

• Accounting standards applicable to E&P companies
• IFRS 6

Annual Reports

• Review of sample oil and gas company "notes to the accounts"

Accounting for pre-development costs

• Policy choices and accounting standards on pre-licence, exploration and appraisal costs

Commercial reserves

• The nature of commercial reserves and their significance in accounting

The DD&A calculation

• Calculating DD&A on a unit of production basis
• Dealing with changes in costs and reserve estimates

Accounting for decommissioning

• Accounting policy choices on provisions for decommissioning and comparison of IAS 37, FAS143 and FRS12 requirements

Impairment or ceiling tests

• Testing for impairment of assets and comparison of IAS 36, FAS 144, and FRS 11 requirements

IASB extractive activities draft discussion paper

• Accounting treatment of exploration and appraisal costs
• Reserves disclosure
• Publish what you pay

Commitments, provisions and contingent liabilities

• Understand the accounting / disclosure requirements of each category

Accounting for financing arrangements

• Recommended practice on accounting for E&P company financing and risk-sharing arrangements

Accounting for sales revenue

• Recommended practice on accounting for oil and gas sales
• The timing of revenue recognition and matching of costs

Accounting for E&P company taxes

• Introduction to types of E&P taxes
• Deferred tax accounting

Topic 2 - Joint-venture and production-sharing accounting

What you will learn

This segment of the course will enhance your knowledge of joint-venture and production-sharing accounting issues, with emphasis on their accounting requirements. Reference will be made to sample JV and production-sharing contracts from different countries, and to attempts to standardise accounting practice, e.g. COPAS, SOAP.

Topics covered include:

Ownership and expoitation of reserves

• Government control and issues
• Oil and gas company issues
• Calcualtion of "take"

Concessionary systems

• Features of a typical oil and gas concessionary system

Contractual systems

• Common features of oil and gas contractual systems

PSC - accounting procedure

• Review of sample accounting procedure

Cost oil and profit oil

• definitions and common features
• calculating cost oil and profit oi

"R" factors

• what are "R" factors?
• calculating "R" factors

PSC & JV Audit

• Features of oil and gas industry financial audits

JV accounting - best practice

• Review of oil and gas industry standards

JV cash management and billing

• Cash calling and invoice funding
• How to account for JV billing statements

JV cost allocation

• Methods for allocating shared JV costs

Unitisation and redetermination

• How to account for product and cost-sharing changes following an equity redetermination

Topic 3 - Budgeting and cost control

What you will learn

This final segment of the course will improve your abilities to prepare departmental and company-wide E&P budgets and control and analyse the costs incurred. It will also enable you to understand the nature of costs unique to an E&P company, and how these costs behave under different conditions.

Realistic examples are provided to encourage you to develop a model of good budgeting and cost-control practice that can be applied back in the workplace, along with a team exercise to simulate the preparation of the annual budget of an E&P company.

Topics covered include:

Performance measurement

• Review of the most commonly used industry key performance indicators

Cost control and different approaches to budgeting

• The nature and behaviour of costs
• How to report, monitor and control costs
• Incremental and zero-based budgeting

Departmental budgets

• How to prepare a departmental budget

Financial and strategic planning

• Understanding the context, objectives, principles and processes of financial planning and control

Corporate budgeting

• How to develop and apply a budgeting methodology
• Comparison of budget output against corporate objectives