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1. A field has recently been brought into production. 14 development wells have already been drilled but a further 7 development wells have yet to
1. A field has recently been brought into production. 14 development wells have already been drilled but a further 7 development wells have yet to be drilled. Depreciation is based only on those reserves that are proved and developed. Capitalised exploration and appraisal costs $62,000,000 Capitalised development costs $874,000,000 Total proved reserves 326,000,000 barrels Proved developed reserves 214,000,000 barrels Production in period 21,000,000 barrels Required: Calculate DD&A charge for the accounting period using: a) Proved developed reserves only; b) Total proved reserves. 2. Again we will use the data in the example above, but in this example we will have to add in the estimated costs of the 7 remaining development wells. Capitalised exploration and appraisal costs $62,000,000 Capitalised development costs $874,000,000 7 further development wells $84,000,000 Total proved reserves 326,000,000 barrels Proved developed reserves 214,000,000 barrels Production in period 21,000,000 barrels Required: Calculate DD&A charge for the accounting period using the prospective method. Assume the total number of wells to be drilled has not changed
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