Oil & Gas
E&E Farm-Out — Partial Interest Sold Pre-Discovery
Selling a 40% working interest in an exploration block before any discovery is made.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Cash (Farm-In Payment) | Asset (+) | 8,000,000.00 | - |
| E&E Assets (40% Share) | Asset (-) | - | 6,000,000.00 |
| Gain on E&E Farm-Out | Revenue (+) | - | 2,000,000.00 |
💡 Accountant's Note
Pre-discovery farm-outs monetize acreage value before the drilling risk is resolved. The gain is the consideration less the proportional book value of the E&E asset. Some operators use a full-cost pool method that eliminates the gain.
Professional Excel Template
Get the automated version of this entry. Includes built-in IFRS checks, VAT calculators, and SAP-ready upload formats.
QA
Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.