PXD » Topics » Successful efforts method of accounting.

This excerpt taken from the PXD 10-K filed Feb 25, 2009.
Successful efforts method of accounting. The Company utilizes the successful efforts method of accounting for oil and gas producing activities as opposed to the alternate acceptable full cost method. In general, the Company believes that, during periods of active exploration, net assets and net income are more conservatively measured under the successful efforts method of accounting for oil and gas producing activities than under the full cost method. The critical difference between the successful efforts method of accounting and the full cost method is as follows: under the successful efforts method, exploratory dry holes and geological and geophysical exploration costs are charged against earnings during the periods in which they occur; whereas, under the full cost method of accounting, such costs and expenses are capitalized as assets, pooled with the costs of successful wells and charged against the earnings of future periods as a component of depletion expense. During 2008, 2007 and 2006, the Company recognized exploration, abandonment, geological and geophysical expense from continuing operations of $235.5 million, 279.3 million and $250.2 million, respectively. During 2007 and 2006, the Company recognized exploration, abandonment, geological and geophysical expense from discontinued operations of $14.4 million and $21.3 million, respectively, under the successful efforts method.

 

This excerpt taken from the PXD 10-K filed Feb 21, 2008.
Successful efforts method of accounting. The Company utilizes the successful efforts method of accounting for oil and gas producing activities as opposed to the alternate acceptable full cost method. In general, the Company believes that, during periods of active exploration, net assets and net income are more conservatively measured under the successful efforts method of accounting for oil and gas producing activities than under the full cost method. The critical difference between the successful efforts method of accounting and the full cost method is as follows: under the successful efforts method, exploratory dry holes and geological and geophysical exploration costs are charged against earnings during the periods in which they occur; whereas, under the full cost method of accounting, such costs and expenses are capitalized as assets, pooled with the costs of successful wells and charged against the earnings of future periods as a component of depletion expense. During 2007, 2006 and 2005, the Company recognized exploration, abandonment, geological and geophysical expense from (i) continuing operations of $279.3 million, $250.2 million and $153.8 million, respectively, and (ii) discontinued operations of $14.4 million, $21.3 million and $73.4 million, respectively, under the successful efforts method.

 

EXCERPTS ON THIS PAGE:

10-K
Feb 25, 2009
10-K
Feb 21, 2008

"Successful efforts method of accounting." elsewhere:

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