Oil & Gas
Exploratory Drilling — E&E Asset
Capitalizing the cost of drilling an exploratory well to test the presence of hydrocarbons.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Exploration & Evaluation Assets (E&E — Drilling) | Asset (+) | 18,000,000.00 | - |
| Cash / Accounts Payable (Drilling Contractor) | Asset/Liability (-) | - | 18,000,000.00 |
💡 Accountant's Note
Exploratory wells are drilled to test if oil or gas is present. The cost is capitalized pending determination of whether commercially viable reserves exist. If reserves are confirmed, the cost is reclassified to development; if not, it is written off.
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