AG-6 Oil Accounting Manual

This is COPAS’ comprehensive guide to accounting for oil, and complements AG-15, Gas Accounting Manual.  This publication provides generally accepted practices for oil allocations and related revenue accounting.  It is intended to be of assistance to accountants and oil producers in establishing or revising oil accounting procedures and in training new personnel.  104 pages. Rev. October 2012

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Description

Table of Content

  1. FOREWORD
  2. NATURE AND OCCURRENCE OF CRUDE OIL
  3. LEASE ACQUISITION
    1. CONTRACTUAL AGREEMENTS
      1. Fee (Private) Mineral Estates
      2. Government Lands & Leases
      3. Net Profit Leases
      4. Joint Interest Leases
      5. Common Provisions of Lease Agreements
  4. STORAGE FACILITIES AND SERVICE UNITS
    1. PURPOSE
    2. OPERATOR’S ROLE
    3. SCOPE
    4. COMPONENTS OF FACILITY OPERATION
    5. TEST SEPARATION
    6. STOCK TANKS
    7. LACT UNITS
  5. OIL AND CONDENSATE MEASUREMENT
    1. INTRODUCTION
    2. OIL AND CONDENSATE MEASUREMENT STANDARDS
    3. PHYSICAL PROPERTIES
    4. ACCEPTED METHODS OF MEASUREMENT
      1. Manual
      2. Automatic Metering
      3. Automatic Custody Transfer (Act Or Lact)
      4. Inventories
  6. DETERMINATION OF PRODUCTION VOLUMES AND DISPOSITIONS
    1. RUN TICKETS AND INVENTORIES
    2. TANK BATTERY STOCK INVENTORY
    3. ALLOCATION BACK TO WELL OR ZONE
    4. ALLOCATION OF COMMINGLED PRODUCTION TO LEASES OR UNITS
    5. ALLOCATION OF UNIT PRODUCTION TO TRACTS
    6. TYPES OF DISPOSITION
    7. DELIVERIES-IN-KIND
    8. SAMPLE RUN TICKET CALCULATION
  7. CRUDE OIL TRADING
    1. INTRODUCTION
    2. OBJECTIVES
    3. TYPES OF EXCHANGE CONTRACTS
    4. TYPES OF EXCHANGE COMMITMENTS
    5. ACCOUNTING TREATMENT
    6. DIFFERENTIALS
    7. EXCHANGE STATEMENTS
    8. EXCHANGE RECONCILIATION
  8. PRICING OF CRUDE OIL & CONDENSATE
    1. INTRODUCTION
    2. RUN TICKET VALUATION
    3. REGULATED PRICING OF CRUDE AND CONDENSATE
  9. OWNERSHIP (Division of Interest)
    1. INTRODUCTION
    2. DIVISION ORDERS AND TRANSFER ORDERS
    3. OIL SALES AGREEMENTS
    4. TRANSPORTATION AGREEMENTS
    5. STATE AGENCIES
    6. FEDERAL AND INDIAN REGULATIONS
    7. UNITS
      1. Introduction
      2. Unitization
      3. Unit Agreement
      4. Unit Operating Agreement
      5. Advantages of Unitizing
      6. Procedural Matters
      7. Exhibit 1 – Oil & Gas Division Order
      8. Exhibit 2 – Initial Participating Area
  10. RECORDING AND ACCOUNTING
    1. INTRODUCTION
    2. THE SALES TRANSACTION
      1. The Sales Agreement
      2. Delivery and Recording
      3. Production and Marketing Costs
      4. Statement Presentation
      5. Recording the Sales
      6. Receivables
      7. Taxes
    3. ROYALTY (AND OTHER) PAYMENTS
      1. Introduction
      2. The Lease Agreement
      3. Special Payment Considerations on Joint Interest Leases
      4. State Agencies
      5. Federal and Indian
      6. The Royalty Statement and Check
      7. Procedure of Payment
      8. Suspended Payments
      9. Minimum Amounts
      10. Transfers
      11. Net Outs
      12. Net Profits
      13. Minimum/Shut-In
      14. Escheat
      15. 1099 Reporting
      16. Invalid Tax Payor ID Withholding
      17. Out of State Royalty Owner Income Tax Withholding
      18. Alien Withholding
      19. Reporting and Accounting Treatment
    4. ACCOUNTING FOR WELLHEAD SALE OF OIL / DERIVATION OF A FINANCIAL ENTRY
    5. INVENTORIES OF CRUDE OIL AND CONDENSATE
  11. REPORTING – INTERNAL AND EXTERNAL
    1. INTRODUCTION
    2. INTERNAL (MANAGEMENT)
      1. Operational
      2. Lease Reporting
    3. EXTERNAL REPORTING (GOVERNMENTAL)
      1. Federal Government – Royalties/Production
      2. State and Local Governments
      3. Production and Severance Taxes
      4. Penalties and Interest
      5. Royalty Reports
    4. EXTERNAL REPORTING (NON-GOVERNMENTAL)
      1. Joint Interest Owners
      2. Royalty Owners
  12. OIL IMBALANCE
    1. INTRODUCTION
    2. OIL PRODUCTION AVAILS ESTIMATE
    3. OIL NOMINATION PROCESS
    4. ACTUAL OPERATOR DELIVERY ALLOCATION
    5. ACTUAL OPERATOR DELIVERY ALLOCATION – RECOMMENDED
    6. DATA ELEMENTS
    7. OIL IMBALANCE STATEMENT
  13. GLOSSARY