commercial reserves, the accumulated costs are charged
to expense.
Barrels of oil equivalent
Using prices or heating content, units of sulphur,
(BOE)
condensate, natural gas and by products are converted to
and expressed in equivalent barrels of oil for standard
measurement purposes.
British Thermal Unit
A measure of the amount of heat required to raise the
(BTU)
temperature of one pound of water one degree
Fahrenheit at the temperature at which water has its
greatest density (39 degrees Fahrenheit).
Bullion
Metal in bars, ingots or other uncoined form.
Carried interest
An agreement by which an entity that contracts to
operate a mineral property and, therefore, agrees to
incur exploration or development costs (the carrying
party) is entitled to recover the costs incurred (and
usually an amount in addition to actual costs incurred)
before the entity that originally owned the mineral
interest (the carried party) is entitled to share in revenues
from production.
Carried party
The party for whom funds are advances in a carried
interest arrangement.
Carrying
party
The party advancing funds in a carried interest
agreement.
Concession
A contract, similar to a mineral lease, under which the
government owning mineral rights grants the
concessionaire the right to explore, develop, and
produce the minerals.
Extractive
industries
3395
Cost recovery oil
Oil revenue paid to an operating entity to enable that
entity to recover its operating costs and specified
exploration and development costs from a specified
percentage of oil revenues remaining after the royalty
payment to the property owner.
Customer smelter
A smelter which processes concentrates from
independent mines. Concentrates may be purchased or
the smelter may be contracted to do the processing for
the independent company.
Delay rental
Annual payments by the lessee of a mineral property to
the lessor until drilling has begun.
Delineation well
A well to define, or delineate, the boundaries of a
reservoir.
Development well
A well drilled to gain access to oil or gas classified as
proved reserves.
Downstream activities
The refining, processing, marketing, and distributing of
petroleum, natural gas, or mined mineral (other than
refining or processing that is necessary to make the
minerals that have been mined or extracted capable of
being sold).
Dry gas
Natural gas composed of vapours without liquids and
which tends not to liquefy.
Dry hole
An exploratory or development well that does not
contain oil or gas in commercial quantities.
Entitlements method
A method of revenue recognition by which a joint
venturer records revenue based on the share of
production for the period to which that venturer is
entitled.
Exploratory well
A well drilled to find and produce oil or gas in an
unproved area, to find a new reservoir in a field
previously found to be productive of oil or gas in another
reservoir, or to extend a known reservoir.
Farm out and farm in
An agreement by which the owner of operating rights in
a mineral property (the farmor) transfers a part of that
interest to a second party (the farmee) in return for the
latter’s paying all of the costs, or only specified costs, to
explore the property and perhaps to carry out part or all
of the development of the property if reserves are found.
3396 Chapter 39
Full cost method
An accounting concept by which all costs incurred in
searching for, acquiring, and developing mineral reserves
in a cost centre are capitalised, even though a specific
cost clearly resulted from an effort that was a failure.
Geological and
Costs of topographical, geological, geochemical, and
geophysical costs (G&G)
geophysical studies.
Infill drilling
Technical and commercial analyses may support drilling
additional producing wells to reduce the spacing beyond
that utilised within the initial development plan. Infill
drilling may have the combined effect of increasing
recovery efficiency and accelerating production.
Joint operating
A contract between two parties to a sharing arrangement
agreement (JOA)
that sets out the rights and obligations to operate the
property, if operating interests are owned by both parties
after a sharing arrangement.
Overlift or underlift
Overlift is the excess of the amount of production that a
participant in a joint venture has taken as compared to
that participant’s proportionate share of ownership in
total production. Underlift is the shortfall in the amount
of production that a participant in a joint venture has
taken as compared to that participant’s proportionate
share of ownership in total production.
Production sharing
A contract between a national oil company or the
contract (PSC)
government of a host country and a contracting entity
(contractor) to carry out oil and gas exploration and
production activities in accordance with the terms of the
contract, with the two parties sharing mineral output.
Profit oil
Revenue in excess of cost recovery oil and royalties.
Recompletion
The process of re-entering a previously completed well
to install new equipment or to perform such services
necessary to restore production.
Redetermination
A retroactive adjustment to the relative percentage
interests of the participants in a field that is subject to an
unitisation agreement.
Risk service contract
A contract by which an entity agrees to explore for,
develop, and produce minerals on behalf of a host
government in return for a fee paid by the host
government.
Royalty
A portion of the proceeds from production, usually
before deducting operating expenses, payable to a party
having an interest in a lease.
Extractive
industries
3397
Sales method
A method of revenue recognition by which a joint
venturer records revenue based on the actual amount of
product it has sold (or transferred downstream) during
the period. No receivable or other asset is recorded for
undertaken production (underlift) and no liability is
recorded for overtaken production (overlift).
Stripping ratio
The ratio of tonnes removed as waste relative to the<
br />
number of tonnes of ore removed from an open pit mine.
Successful efforts method An accounting concept that capitalises only those
upstream costs that lead directly to finding, acquiring and
developing mineral reserves, while those costs that do
not lead directly to finding, acquiring and developing
mineral reserves are charged to expense.
Take-or-pay contracts
An agreement between a buyer and seller in which the
buyer will still pay some amount even if the product or
service is not provided. If the purchaser does not take the
minimum quantity, payment is required for that
minimum quantity at the contract price. Normally,
deficiency amounts can be made up in future years if
purchases are in excess of minimum amounts.
Unitisation
An agreement between two parties, each of which owns
an interest in one or more mineral properties in an area,
to cross-assign to one another a share of the interest in
the mineral properties that each owns in the area; from
that point forward they share, as agreed, in further costs
and revenues related to the properties.
Upstream activities
Exploring for, finding, acquiring, and developing mineral
reserves up to the point that the reserves are first capable
of being sold or used, even if the entity intends to process
them further.
Workovers
Major repairs, generally of oil and gas wells.
References
1 IASC Issues Paper, Issues Paper Extractive
5
DP/2010/1,
1.9.
Industries, IASC, November 2000, 1.5.
6
DP/2010/1,
1.10.
2 Discussion Paper DP/2010/1, Extractive
7
DP/2010/2.1.
Activities, IASB, April 2010, p.7.
8 IASC Issues Paper, 1.16.
3
DP/2010/1,
1.1.
9 IASC Issues Paper, 1.18.
4
DP/2010/1,
1.4-1.5.
10 IASC Issues Paper, 2.3.
3398 Chapter 39
11 IASC Issues Paper, 2.5.
52 J. M. Rendu, Reporting Mineral Resources
12 IASC Issues Paper, 2.6.
and Mineral Reserves in the United States of
13 IASC Issues Paper, 2.10.
America – Technical and Regulatory Issues,
14 IASC Issues Paper, 2.12.
20-25 August 2006, p.2.
15 IASC Issues Paper, 2.24.
53 CRIRSCO Template, International Reporting
16 IASC Issues Paper, 2.26.
Template for the public reporting of exploration
17 IASC Issues Paper, 2.27.
results, mineral resources and mineral reserves,
18 IASC Issues Paper, 2.29.
CRIRSCO, November 2013, 3.
19 IASC Issues Paper, 2.29, 2.30.
54 CRIRSCO Template, 4.
20 IASC Issues Paper, 2.32.
55 CRIRSCO Template, 5.
21 IASC Issues Paper, 2.34.
56 CRIRSCO Template, 8 and 11.
22 IASC Issues Paper, 2.36.
57 CRIRSCO Template, Figure 1.
23 IASC Issues Paper, 2.38.
58 CRIRSCO Template, 18.
24 IASC Issues Paper, 2.42.
59 CRIRSCO Template, 20.
25 Discussion Paper DP/2010/1, para. 2.48.
60 CRIRSCO Template, 21.
26 Discussion Paper DP/2010/1, para. 2.23.
61 CRIRSCO Template, 22.
27 SPE-PRMS,
Petroleum Resources
62 CRIRSCO Template, 23.
Management Systems, Society of Petroleum
63 CRIRSCO Template, 24.
Engineers, 2007 (revised June 2018).
64 CRIRSCO Template, 12.
28 SPE-PRMS,
Petroleum Resources
65 CRIRSCO Template, 30.
Management Systems, Society of Petroleum
66 CRIRSCO Template, 31.
Engineers, 2007.
67 CRIRSCO Template, 32.
29 IASB Agenda Paper 13A, Comparison of
68 Pre codification FAS 69, Disclosures about
Petroleum and Minerals Reserves and
Oil and Gas Producing Activities an
Resource Classification Systems, IASB,
amendment of FASB Statements 19, 25, 33,
22 June 2007, pp.3-4.
and 39, FASB, November 1982, para. 10.
30
IASB Agenda Paper
13A, p.8 and
69 Rendu, pp.9 and 10.
SPE-PRMS, Figure 1-1.
70 IASB Agenda Paper 15C, Possible principles
31 SPE-PRMS, pp.2-3.
for a historical cost accounting model that
32 SPE-PRMS, pp.2-3.
accompanies decision-useful disclosures of
33 SPE-PRMS, pp.10-11.
minerals and oil & gas reserves and resources,
34 SPE-PRMS, pp.10-11.
IASB, 22 June 2007, 6.
35 SPE-PRMS, pp.10-11.
71 IASB Update, September 2008, p.3.
36 SPE-PRMS, pp.2-3.
72 IFRIC Update, January 2006, p.3.
37 SPE-PRMS, pp.2-3.
73 IASC Issues Paper 4.18.
38 SPE-PRMS, pp.2-3.
74 IASC Issues Paper 4.20.
39 SPE-PRMS, 1.1.1.5.
75 IASC Issues Paper 4.45.
40 SPE-PRMS, pp.2-3.
76 IFRIC Update, January 2006, p.3.
41 SPE-PRMS, 1.1.1.5.
77 Amendments to IFRS 1, Additional
42 SPE-PRMS, pp.2-3.
Exemptions for First-time Adopters, IASB,
43 SPE-PRMS, pp.6-9.
July 2009, D8A.
44 SPE-PRMS, 2.1.3.5.1 Figure 2.1.
78 IASC Issues Paper 4.16(b).
45 SPE-PRMS, 2.1.3.5.1.
79 IASC Issues Paper 4.36.
46 SPE-PRMS, pp.9-13.
80 IASC Issues Paper 4.39.
47 SPE-PRMS, 2.3.
81 ASC 932-720-25-1, Extractive Activities – Oil
48 SPE-PRMS, pp.13-19.
and Gas – Other Expenses – Recognition.
49 JORC Code, Australasian Code for Reporting
82 ED 6, Exploration for and Evaluation of
of Exploration Results, Mineral Resources and
Mineral Resources, IASB, January 2004, 14.
Ore Reserves, Joint Ore Reserves Committee
83 IASC Issues Paper, 6.3.
of the Australasian Institute of Mining and
84 IASC Issues Paper, 2.12.
Metallurgy, Australian Institute of
85 IASC Issues Paper, 2.13.
Geoscientists and Minerals Council of
86 IASC Issues Paper, 2.14.
Australia (JORC), 2004, para. 1.
87 IASC Issues Paper, 2.21.
50 Weatherstone, p.5.
88 IASC Issues Paper, 2.21.
51 IASB Agenda Paper 13A, p.3.
89 IASC Issues Paper, Glossary.
Extractive
industries
3399
90 IASC Issues Paper, 2.19.
116
The SEC Observer comment to the
91 IASC Issues Paper, 12.12(b).
Emerging Issues Task Force (EITF) on
92 IASC Issues Paper, 12.68.
Accounting for Gas-Balancing
93 IASC Issues Paper, 12.69.
Arrangements (formerly EITF 90-22) was
94 IASC Issues Paper, 2.23.
codified in ASC 932-10-S99-5 and
95 Guidelines for the Evaluation of Petroleum
rescinded by FASB-ASU-2016-11 Re
venue
Reserves and Resources – A Supplement to
Recognition (Topic 605) and Derivatives
the SPE/WPC Petroleum Reserves
and Hedging (Topic 815): Rescission of
Definitions and the SPE/WPC/AAPG
SEC Guidance Because of Accounting
Petroleum Resources Definitions, Society of
Standards Updates 2014-09 and 2014-16
Petroleum Engineers, 2001, p.120.
Pursuant to Staff Announcements at the
96 D. R. Jennings, J. B. Feiten and H. R. Brock,
March 3, 2016 EITF Meeting.
Petroleum Accounting, Principles,
117 Paragraph BC54 of ASU 2014-09.
Procedures, & Issues, 5th edition,
118 IASC Issues Paper 10.29.
Professional Development Institute, Denton
119 IASC Issues Paper 11.17.
(Texas), pp.165-169.
120 IASC Issues Paper 11.9-11.16.
97 IASC Issues Paper, 12.9.
121 IASC Issues Paper 7.61-7.68.
98 SPE-PRMS, p.18.
122 IASC Issues Paper 6.64.
99 Former Oil Industry Association Committee
123 IASC Issues Paper, 12.14.
Statement of Recommended Practice
124 Former OIAC SORP 175.
Accounting for Oil and Gas Exploration,
125 Former OIAC SORP 176.
Development, Production and 126 IASC Issues Paper, 12.14.
Decommissioning Activities (July 2001)
127 Former OIAC SORP 177-178.
“Former OIAC SORP” 149.
128 Former OIAC SORP 179-180.
100 Former OIAC SORP 150.
129 IASC Issues Paper, 7.13.
101 Former OIAC SORP 16.
130 IASC Issues Paper, 7.19.
102 Former OIAC SORP para 144.
131 IASC Issues Paper, 7.20.
103 IASB Update, October 2017.
132 IASC Issues Paper, 7.36.
104 IASB Work Plan as at 12 June 2018.
133 IASC Issues Paper, 7.39.
105 ASC 930-805-30-1 Extractive Activities –
134 IASC Issues Paper, 7.41.
Mining – Business Combinations – Initial
135 IASC Issues Paper, 7.42.
Measurement (pre-codification EITF 04-3,
136 IASC Issues Paper, 7.46.
Mining Assets: Impairment and Business
137 IASC Issues Paper, 7.49.
Combinations, EITF, March 2004).
138 IASC Issues Paper, 7.50.
106 IFRIC Update, January 2011.
139 IASC Issues Paper, 7.23.
107 IASC Issues Paper, 9.26.
140 IASC Issues Paper, 7.24.
108 AASB 1022 Accounting for the Extractive
141 IASC Issues Paper, 7.25.
Industries (now superseded).
142 IASC Issues Paper, 7.61.
109 Former OIAC SORP.
143 Global infomine
110 AASB 1022 Accounting for the Extractive
International GAAP® 2019: Generally Accepted Accounting Practice under International Financial Reporting Standards Page 672
