Oil and Gas Accounting Terms
- Account
- An accounting
form that is used to record the increase and decrease in each financial
statement item
- Account Payable
- the liability
created by a purchase on account
- Account Receivable
- A
claim against the customer created by selling merchandise or services
on credit
- Accounting
- An information
system that provides reports to stakeholders about the economic activities
and condition of a business
- Activity Analysis
- The
study of employee effort and other business records to determine the
cost of activities
- Adjusting Entries
- The
journal entries that bring the accounts up to date at the end of the
accounting period
- Aging the Receivables
-
The process of analyzing he accounts receivable and classifying them
according to various age groupings, with the due date being the base
point for determining age
- Allowable
- The amount
of oil or gas which a well or lease is permitted to produce under proration
orders of a State regulatory body.
- API Gravity
- the density
of crude oil on a scale adopted by the American Petroleum Institute
- Assets
- The resources
owned by a business
- Associated Gas
- Gas occurring
in or produced from a gas cap associated with an oil zone
- Backpressure
- Pressure
caused by restriction of the natural flow of oil and gas
- Balance of the Account
-
The amount of the difference between the debits and the credits that
have been entered into an account
- Balance Sheet
- A list
of the assets, liabilities, and owner's equity as of a specific date,
usually at the close of the last day of a month or year
- Bank Statement
- A summary
of all transactions mailed to the depositor or made available online
by the bank each month
- Barrel of Oil
- The standard
measure of crude oil volume in the U.S., being 42 U.S. gallons of oil
at 60 degrees Fahrenheit
- Basin
- A geologic region
of sediments formerly occupied by an ancient sea and separated from
other basins by upwarped rock "highs"
- Bed
- A recognizable sedimentary
rock layer or strata
- BTU
- British Thermal Unit,
the amount of heat needed to raise the temperature of one pound of water
one degree Fahrenheit
- Capital Stock
- The portion
of a corporation's owners' equity contributed by investors (owners)
in exchange for shares of stock
- Chart of Accounts
- A list
of the accounts in the ledger
- Casing Head Gas
- Gas that
is produced along with oil from an oil well
- Casing Point
- The objective
depth, either a specified depth or the depth at which a specific zone
is penetrated
- Choke
- A short heavy steel
pipe section having an orifice for restricting and controlling the flow
of oil and gas
- Common Stock
- The stock
outstanding when a corporation has issued only one class of stock
- Condensate
- Hydrocarbons
which are in the gaseous state under reservoir conditions but become
liquid at the surface and may be recovered by conventional separators
- Contra Account
- An account
offset against another account
- Cost
- A payment of cash
for the purpose of generating revenues
- Credits
- Amounts entered
on the right side of an account
- Current Assets
- Cash and
other assets that are expected to be converted to cash or sold or used
up, usually within one year or less, through the normal operations of
the business
- Current Liabilities
- Liabilities
that will be due within a short time and that are paid out of current
assets
- Day Work
- In drilling
contracts, work paid for at an agreed price per day
- Debits
- Amounts entered
on the left side of an account
- Delivery Pressure
- The
agreed pressure for delivery of gas into a gas pipeline under a gas
purchase contract
- Division
- A decentralized
unit that is structured around a common function, product, customer,
or geographical territory
- Employee's Earnings Record
-
A detailed record of each employee's earnings
- Expenses
- Assets used
up or services consumed in the process of generating revenues
- Exploration
- The search
for oil and gas
- FICA Tax
- Federal Insurance
Contributions Act tax used to finance federal programs for old-age and
disability benefits (social security) and health insurance for the aged
(Medicare)
- Field
- A singly occurring
oil or gas pool or an area of overlying separate oil or gas pools
- Financial Accounting
-
The branch of accounting that is concerned with recording transactions
using generally accepted accounting principles (GAAP) for a business
or other economic unit and with a periodic preparation of various statements
from such records
- Financial Accounting Standards Board
(FASB)
- the authoritative body that has the primary responsibility
for developing accounting principles
- Financial Statements
-
Financial reports that summarize the effects of events on a business
- Fiscal Year
- The annual
accounting period adopted by a business
- Fixed Assets
- Assets that
depreciate over time, such as equipment, machinery and buildings
- Fixed Costs
- Costs that
tend to remain the same in amount, regardless of variations in the level
of activity
- Gas Shrinkage
- Gas consumed,
absorbed or lost in the process of extracting liquid products and making
gas saleable
- Gas Well
- A well producing
predominantly natural gas
- Gas Gathering System
-
Pipeline and completion facilities collecting gas from various wells
and leases and delivering the gas into a gas pipeline or plant at a
central point
- General Ledger
- The primary
ledger, when used in conjunction with subsidiary ledgers, which contains
all of the balance sheet and income statement accounts
- Generally Accepted Accounting Principles
(GAAP)
- Generally accepted guidelines for the preparation
of financial statements
- Goodwill
- An intangible
asset that is created from such favorable factors as location, product
quality, reputation, and managerial skill
- Gross Pay
- The total earning
of an employee for an employee for a payroll period
- Gross Profit
- Sales minus
the cost of merchandise sold
- Heater Treater
- A device
used to break oil-water emulsions and to separate oil from water through
the use of heat
- Income Statement
- A summary
of the revenue and expenses for a specific period of time, such as a
month or year
- Intangible Assets
- Long-term
assets that are useful in the operation of a business, are not held
for sale and are without physical qualities
- Interest Revenue
- Money
received for interest
- Invoice
- The bill that
the seller sends to the buyer
- Journal Entry
- The form
of recording a transaction in the journal
- Ledger
- A group of accounts
for a business
- LNG
- Liquefied Natural
Gas
- LPG
- Liquefied Petroleum
Gas
- Land Man
- A person whose
primary duties are the securing of oil and gas leases
- Liabilities
- The right
of creditors that represent debts of the business
- Long-term liabilities
-
Liabilities that usually will not be due for more than one year
- Management Process
- The
five basic management functions of planning, directing, controlling,
improving and decision making
- MCF
- The standard unit
volume of measure for natural gas (1000 cubic feet at 60 degrees Fahrenheit)
- Marginal Well
- A well
capable of producing oil or gas in limited amounts only slightly above
economic units
- Mixed Cost
- A cost with
both variable and fixed characteristics
- Net Income or Net Profit
-
The amount by which revenues exceed expenses
- Net Loss
- The amount by
which expenses exceed revenues
- Net Pay
- Gross pay less
payroll deductions; the amount the employer is obligated to pay the
employee
- Net Sales
- Revenue received
for merchandise sold to customers less any sales returns and allowances
and sales discounts
- Notes Receivable
- A customer's
written promise to pay an amount and possibly interest at an agreed-upon
rate
- Open Hole
- The uncased
part of a well
- Owner's Equity
- The
owner's right to the assets of the business
- Payroll
- The total amount
paid to employees for a certain period
- Posting
- The process of
transferring the debits and credits from the journal entries to the
accounts
- Prepaid Expenses
- Items
such as supplies that will be used in the business in the future
- Producing Well
- A well
which produces or is capable of producing oil or gas
- Profit
- The difference
between the amounts received from customers for goods or services provided
and the amounts paid for the inputs used to provide the goods or services
- Receivables
- All money
claims against other entities, including people, business firms and
other organizations
- Recompletion
- Work on
a well to recomplete it in a different formation, either deeper or shallower
than originally completed
- Retained Earnings
- Net
income retained in a corporation
- Revenues
- Increases in
owner's equity as a result of selling services or products to customers
- Sales
- The total amount
charged customer for merchandise sold, including cash sales and sales
on account
- Shut In
- To stop a well
from producing, i.e., shut down the pumping unit on a well or close
a valve on the flow line of a flowing oil or gas well
- Spud
- The beginning of
drilling operations
- Stock
- Shares of ownership
of a corporation
- Stockholders
- The owners
of a corporation
- Stockholder's Equity
-
the owners' equity in a corporation
- Tank Bottoms
- Emulsified
oil with water and other substances concentrated at the bottom of lease
storage or other oil storage tanks
- Taxable Income
- The income
according to the tax laws that is used as a base for determining the
amount of taxes owed
- Trial Balance
- A summary
listing of the titles and balances of accounts in the ledger
- Unit of Measure Concept
-
A concept of accounting requiring that economic data be recorded in
dollars
- Viscosity
- The measure
of a liquid's resistance to flow
- Voucher
- A special form
for recording relevant data about a liability and the details of its
payment
- Well
- A hold drilled in
the search for oil, gas or water, or for a special purpose in connection
with oil or gas operations
