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Since 1989, the Institute of Petroleum Accounting at the University of North Texas has conducted surveys to determine the extant accounting practices in the oil and gas extractive industry. This is the second in a two-part series which provides a comparison of some of the important accounting practices and how they have changed over time as found by surveys conducted in 1994, 1997, and 1999. (For Part One, see the Fall/Winter 2001 issue of the Petroleum Accounting and Financial Management Journal, pp. 1-27.) These surveys were conducted in partnership with PricewaterhouseCoopers L.L.P. In this issue we recap the description and background of the companies who responded to these surveys and report the responses to current practice concerning gas imbalance accounting, crude oil exchange accounting, revenue accruals and finding costs, capitalized interest, and needed changes in financial accounting and income tax rules.*
Background of Responding Companies
On three occasions between 1994 and 1999, the Institute of Petroleum Accounting mailed questionnaires to over 300 privately and publicly held oil and gas companies. The companies responding were predominantly publicly held independent producers (see Table 1 of part one). In terms of size, the public and private companies responding had sales revenues and dollar volumes of crude oil, natural gas, and gas liquids ranging from under $ 1 million to in excess of $5 billion. Approximately half of the companies had sales revenue exceeding $100 million. Background information on the responding companies also suggests a growth in oil and gas operations outside the United States. In 1994, 16 (23.2%) of the companies in the sample had oil and gas producing operations outside the United States that accounted for greater than 10% of the company's oil and gas producing assets or sales. Despite a drop in the number of companies responding to the survey in 1999, 21 (46.7%) companies responded as having significant foreign oil and gas operations. However, the most notable change provided in the background information section was the increase in the proportion of the responding companies using successful efforts as the primary accounting method for oil and gas producing activities. The proportion of companies increased from 56.5% of companies in the 1994 survey to 80.0% of companies in the...