Oil & Gas Knowledge Center
Explore our verified library of Oil & Gas transactions. Every entry is reviewed for IFRS compliance and real-world accuracy by our technical accounting team.
Seismic Survey Costs — E&E Asset
Capitalizing the cost of a 3D seismic survey conducted during the exploration phase.
Exploratory Drilling — E&E Asset
Capitalizing the cost of drilling an exploratory well to test the presence of hydrocarbons.
Dry Hole Write-Off
Writing off the cost of an exploratory well that found no commercially viable hydrocarbons.
E&E Asset Reclassified to Development Asset
Reclassifying an exploratory well to a development asset after commercial viability is determined.
E&E Asset Impairment — Trigger Event
Writing down an E&E asset when indicators of impairment exist (e.g., licence expiry, decision to abandon).
Development Well — Capitalized Cost
Capitalizing the drilling and completion costs for a development well in a proven field.
Production Asset Depletion — Units of Production
Recording monthly depletion of the oil & gas asset based on barrels produced.
Lifting Costs — Operating Expense
Recording the day-to-day costs of extracting oil from a producing well (lease operating expenses).
Production Sharing Contract — Government Take
Recording the government's share of production under a Production Sharing Contract (PSC).
Royalty Expense — Government / Land Owner
Recording the royalty payable on gross production to the government or mineral rights owner.
Crude Oil Inventory — Production Recognized
Recording crude oil extracted and placed into storage tanks as inventory.
Pipeline Tariff Income
Earning tariff revenue from third-party producers who use the company's pipeline for transportation.
Asset Retirement Obligation (ARO) — Initial Recognition
Recording the present value of the estimated future cost to decommission an oil platform or well.
ARO Accretion Expense (Unwinding of Discount)
Recording the annual unwinding of the discount on the ARO liability.
ARO Revision — Change in Cost Estimate
Revising the ARO liability upward when new engineering studies increase decommissioning cost estimates.
Actual Decommissioning Expenditure
Recording costs incurred to plug a well and restore the site at the end of its productive life.
Crude Oil Sale — Revenue at Market Price
Recording the sale of crude oil cargo at the prevailing market price.
Natural Gas Sales Revenue
Recording monthly gas sales under a long-term gas supply agreement.
Take-or-Pay Contract — Minimum Payment Revenue
Recognizing the minimum payment under a take-or-pay contract when the buyer fails to take contracted volumes.
Oil Price Hedge — Swap Contract Fair Value
Revaluing an oil price swap used to protect against falling crude prices.
Oil Price Hedge — Settlement Received
Receiving a settlement payment when the hedge is settled and oil prices fell below the hedged price.
Underlift / Overlift Adjustment (JV Production)
Recording an underlift position where the company lifted less crude than its entitlement share.
JV Cash Call — Paid to Operator
Making a cash call payment to the JV operator to fund development drilling.
JV Cash Call — Received by Operator from Partners
The JV operator receives cash calls from non-operating partners to fund operations.
JV Partner Billings — Monthly Cost Statement
The operator bills non-operating partners for their share of monthly JV operating costs.
Cost Recovery Entitlement — PSC
Recording the company's entitlement to 'cost oil' under a Production Sharing Contract.
Profit Oil Entitlement — PSC Share
Recording the company's share of 'profit oil' after cost recovery under a PSC.
Farm-Out Transaction — Partial Interest Sold
The company sells a 30% working interest in a license to a third party in exchange for a carried interest.
Petroleum Income Tax Provision
Accruing the special petroleum income tax applicable in GCC and MENA producing countries.
Deferred Tax on E&E Assets
Recognizing the deferred tax liability arising from the temporary difference on capitalized E&E costs.
Royalty — Tax vs Accounting Treatment
Recording the difference between the royalty expense as per accounts and its tax treatment.
Resource Rent Tax (Petroleum Resource Rent Tax)
Accruing a resource rent tax that applies once the project achieves a certain rate of return.
Ring-Fencing — Separate Tax Calculation Per License
Maintaining separate taxable income calculations for each license area to prevent cross-subsidy.
Geological & Geophysical (G&G) Studies — Expensed
Expensing geological mapping and regional basin studies before an exploration license is secured.
Exploration License Acquisition Cost Capitalized
Capitalizing the signature bonus and legal costs paid to acquire an exploration permit/block.
Exploration License — Annual Rental Payment
Paying the annual license rental to the host government to maintain the exploration permit in good standing.
Exploratory Well — Suspended Pending Determination
Keeping an exploratory well's costs capitalized while the company assesses whether reserves are commercial.
Suspended Well — Written Off After Determination
Writing off a previously suspended exploratory well after management decides not to develop.
Stratigraphic Test Well — Cost Treatment
Recording a well drilled purely to obtain geological information with no production intent.
Exploration Overhead Allocation to E&E Asset
Allocating a portion of exploration department salaries and overhead to the E&E asset.
E&E Farm-Out — Partial Interest Sold Pre-Discovery
Selling a 40% working interest in an exploration block before any discovery is made.
Offshore Platform / Production Facility — Construction
Capitalizing construction costs for a fixed offshore production platform.
Subsea Infrastructure Capitalized
Capitalizing subsea pipelines, wellheads, manifolds, and umbilicals connecting wells to the platform.
Gas Processing Plant Construction — Capitalized
Capitalizing the cost of building a gas treatment and compression facility.
Water / Gas Injection Well — Capitalized
Capitalizing the cost of drilling and completing an injection well for pressure maintenance.
Development Borrowing Cost Capitalized (IAS 23)
Capitalizing interest on a project finance facility specifically funding a qualifying development asset.
Facilities Turnaround / Shutdown — Major Maintenance
Recording the cost of a planned major maintenance turnaround on a production facility.
Enhanced Oil Recovery (EOR) — Cost Treatment
Recording the cost of a chemical EOR program injecting surfactants to increase oil recovery.
DD&A — Facilities and Equipment (Units of Production)
Monthly depletion, depreciation, and amortization of all producing assets using the UOP method.
DD&A Rate Revision — Reserve Estimate Change
Revising the DD&A rate prospectively after an upward revision to proved developed reserves.
Gas Processing Plant — Straight-Line Depreciation
Depreciating a gas plant on a straight-line basis over its 30-year useful life.
Impairment Test — Producing Field CGU (IAS 36)
Recording an impairment charge when the recoverable amount of a producing field falls below book value.
Impairment Reversal — Proved Reserves Upgrade
Reversing part of a prior impairment charge following a significant reserve upgrade.
Gas Flaring Cost and Regulatory Penalty
Recording the cost of flaring associated gas and any regulatory fine for exceeding the flaring limit.
Produced Water Treatment & Disposal
Recording the cost of treating and disposing of water produced alongside oil and gas.
Crude Oil Quality Adjustment — Price Differential
Recording a price discount on heavy, high-sulphur crude relative to the Brent benchmark.
Oil Stock Gain / Loss — Tank Calibration Adjustment
Adjusting for the difference between metered volumes and physical tank dip measurements.
LNG Liquefaction Cost
Recording the cost of liquefying natural gas at the LNG train for export.
LNG Cargo Sale — Revenue Recognition
Recognizing revenue from the sale of an LNG cargo to an Asian buyer.
Condensate Sale — Revenue Recognition
Recognizing revenue from selling condensate (light liquid hydrocarbons) separated from gas.
NGL Separation & Sale
Recording revenue from natural gas liquids (ethane, propane, butane) extracted from raw gas.
Crude Oil Transportation — Tanker Hire
Paying a tanker hire charge to transport crude from the loading terminal to the customer's port.
Offshore Installation Insurance Premium
Annual insurance premium for an offshore production platform covering property damage and well control.
Oil Price Formula — Retroactive Adjustment
Adjusting revenue when the final price is calculated retroactively based on a monthly average index.
Make-Up Gas Delivery — Take-or-Pay Fulfillment
Delivering make-up gas to a buyer who previously paid but did not take their contracted volumes.
Capacity Reservation Fee Income
Earning a fee from a third party reserving pipeline capacity regardless of actual throughput.
Pipeline Tariff — Annual Escalation Clause
Applying the annual CPI-linked escalation to the pipeline tariff charged to shippers.
Force Majeure — Revenue Suspension
Suspending revenue recognition during a force majeure event (natural disaster, conflict) that halts production.
Crude Blending Revenue
Earning a premium by blending heavy and light crude streams to produce a marketable blend grade.
Non-Operator — Share of JV Development Capex
Recording the non-operator's proportional share of development capex based on the JV billing statement.
JV Audit Adjustment — Prior Period Cost Correction
Recording a prior period adjustment following the annual JV audit that identified a misallocation.
JV Partner Default — Non-Consent Penalty
Recording the penalty uplift when a JV partner elects not to participate in a well, triggering a non-consent penalty.
JV Carried Interest — Funding on Behalf of Carry Partner
Recording the carrying of a partner's share of exploration costs in exchange for a promoted interest.
Technical Assistance Fee to Operator
Non-operator paying a technical services fee to the operator for managing the JV.
JV Cash Call Surplus — Returned to Partners
Recording the return of excess cash call funds after a budget underspend.
Farm-Out — Carry Obligation Fulfilled
Recording when the carry obligation (funding the partner's share) is satisfied and the receivable is recovered from production.
Refinery — Crude Oil Intake (Feedstock Purchase)
Recording the purchase of crude oil as feedstock for refinery processing.
Refined Product Inventory — Gasoline and Diesel
Transferring refined products from the refinery production process into finished goods inventory.
Refinery Processing Cost — Operating Expense
Recording the monthly refinery operating costs: energy, catalysts, maintenance, and labour.
Refining Margin — Product Sale vs Crude Cost
Recording the sale of gasoline and diesel and recognizing the refining margin.
Pipeline Ship-or-Pay — Minimum Revenue Recognized
Recognizing minimum ship-or-pay revenue when a shipper fails to use their booked capacity.
Storage Terminal Fee Income
Earning monthly storage fees from third parties storing oil products in the terminal.
LPG Bottling and Distribution Cost
Recording the cost of bottling LPG into cylinders and distributing to retail customers.
Environmental Remediation Provision (IAS 37)
Recognizing a provision for contaminated soil remediation at an onshore production site.
Environmental Remediation — Actual Expenditure
Recording actual remediation spending against the previously established provision.
Carbon Credit Purchased
Purchasing voluntary carbon credits to offset the company's Scope 1 and 2 emissions.
Carbon Credit Surrendered (Obligation Met)
Surrendering carbon credits to meet a regulatory or voluntary emissions obligation.
HSE Training & Compliance Cost
Recording the cost of mandatory health, safety, and environment training programs.
Community Investment / Social Obligation
Recording mandatory or voluntary social investment spending required under the concession agreement.
Oil Spill Cleanup Cost
Recording emergency costs to contain and clean up an oil spill from a pipeline rupture.
Expatriate Staff Payroll — Operations
Recording monthly gross salaries for expatriate drilling engineers, geologists, and production staff.
Local Staff Payroll and SSC (Jordan)
Recording monthly payroll and SSC for Jordanian national employees in oil operations.
EOSB Monthly Provision — O&G Staff (Jordan)
Accruing end-of-service benefits for Jordanian employees in oil and gas operations.
Expat Housing and Relocation Cost
Paying for expatriate staff accommodation and one-time relocation costs.
Remote Operations — Camp / Accommodation Cost
Monthly cost of running accommodation camp facilities for workers at a remote onshore oil field.
Helicopter and Offshore Logistics Cost
Monthly cost of helicopter crew changes and supply vessel logistics to an offshore platform.
Reserve-Based Lending (RBL) — Facility Drawdown
Drawing down a reserve-based lending facility to fund development drilling.
RBL — Semi-Annual Borrowing Base Redetermination
Reducing the RBL borrowing base after a downward reserve revision forces partial repayment.
Oil Price Collar — Put Option Premium Paid
Paying the upfront premium for a put option protecting against oil prices falling below a floor.
Oil Price Collar — Fair Value Movement
Revaluing the oil price collar at month-end as oil prices move.
FX Loss on USD-Denominated Operating Costs
Recording FX losses when local currency weakens and USD-priced services cost more.
Project Finance — Equity Bridge Loan
Drawing an equity bridge loan to fund the equity portion of a project before long-term financing closes.
E&P Subsidiary Dividend to Parent Company
An oil-producing subsidiary declares and pays a dividend to its parent holding company.
Petroleum Income Tax — Quarterly Installment Payment
Making a quarterly advance tax payment based on estimated annual petroleum income tax.
Deferred Tax — ARO Liability
Recognizing a deferred tax asset on the ARO liability where the decommissioning expenditure is tax-deductible when incurred.
Deferred Tax — Development Capex (Accelerated Tax Depreciation)
Recording the deferred tax liability where accelerated tax depreciation on development assets exceeds accounting DD&A.
Tax Loss Carryforward — Deferred Tax Asset
Recognizing a DTA for exploration-phase tax losses expected to be utilized against future production profits.
Withholding Tax on Service Contractor Payments
Withholding tax on payments to foreign drilling and oilfield service companies.
Customs Duty on Imported Drilling Equipment
Capitalizing customs duties and import taxes on a drilling rig imported for exploration.
VAT Refund Claim on Exploration Costs
Filing a VAT refund claim for input tax paid on goods and services used in exploration.
Government Royalty in Kind (RIK)
Recording the government taking its royalty share in physical oil rather than cash.
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