1.The SEC requires:

a)all oil & gas companies to make extensive disclosures of reserve information.

b)public companies not to disclose their reserve information so the public would not be misled.

c)public companies to make extensive disclosures of reserve information.

d)public companies to disclose reserve quantities but not the measure of reserve values.

2.Angelview Oil Corp., a successful efforts company, spends $850,000 on G&G activities to locate and explore an oil prospect. The company should:

a)capitalize the $850,000.

b)expense the $850,000.

c)temporarily capitalize the $850,000 to a Well-in-Progress account.

d)capitalize or expense the $850,000 depending on the management's intent.

3.Carbonale Inc. owns a land that is clearly separated from a known accumulation by a nonproductive reservoir.

a)This property is classified as reserves.

b)This property is classified as proved reserves.

c)This property may contain prospective resources if reserve is assigned to adjacent reservoirs.

d)This property is classified as proved undeveloped reserves.

4.Which of the following statements is INCORRECT regarding a top lease?

a)A top lease is a new lease executed before expiration or termination of the existing lease.

b)A two-party top lease involves the current working interest owner.

c)In a two-party top lease, the book value of the old lease will be written off, and only the acquisition costs of the new lease will be capitalized.

d)In a three-party top lease, acquisition costs paid by the new lessee are capitalized.

5.When evaluating whether the unproved properties should be impaired, an E&P company should consider:

a)the expiration of the primary lease term.

b)successful rate on the lease or on nearby leases.

c)future drilling plans.

d)all of the above factors should be considered.

6.On December 31, 20X1, Unergy Co. had estimated proved reserves of 795,000 bbl. During year 20X2, the company produced 5,000 bbl and an additional reserve of 40,000 bbl was proved. In order to calculate DD&A, the company's estimated proved reserves at beginning of 20X2 is:

a)795,000 bbl.

b)800,000 bbl.

c)835,000 bbl.

d)840,000 bbl.

7.Oil and gas production activities include:

a)transporting the oil and gas to a third party.

b)lifting the oil and gas to the surface of the ground.

c)marketing the oil and gas for a better price.

d)refining the oil and gas to a usable status.

8.An oil exploration company would like to drill a test well on a property. The company has to obtain:

a)a mineral interest.

b)a royalty interest.

c)a net profit interest.

d)a surface right.

9.Which of the following statements is INCORRECT under the successful efforts method?

a)Successful exploratory drilling costs are capitalized.

b)Nondrilling exploration costs are expensed.

c)Successful development costs are capitalized.

d)Unsuccessful development costs are expensed.

10.Paying $80 per acre, Sunbelt Corp. acquires a 100 acre undeveloped lease (Lease A). Broker's and recording fees are $1,200. The company has an in-house attorney working solely on lease acquisition and the attorney's salary's is $120,000. The attorney's salary is allocated to all leases acquired during the year, based on relative acreage acquired. Leases totaling 800 acres are acquired in this year. Regarding Lease A, Sunbelt Corp. should:

a)Debit Salary Expense - Attorney for $120,000.

b)Debit Salary Expense - Attorney for $15,000.

c)Debit Unproved Property for $9,200.

d)Debit Unproved Property for $24,200.