7. A company may have interest in an area such as an offshore block that is next to another block, both of which are believed to overlie the same reservoir. It likely would want to obtain information about the neighboring block as the owner of that block conducts drilling activities, this is called Test-Well Contributions. T/F 8. To obtain information about the adjacent block, owners of adjacent blocks frequently will enter into a test well contribution agreement. These agreements are normally bottom-hole, dry- hole or acreage agreements. T/F 9. In a Dry-Hole Agreement, Company ABC agrees to pay Company DEF a certain sum if the well being drilled by Company DEF reaches a specified depth or beyond. In return, Company DEF will provide Company ABC with all the data obtained as the well is drilled. If the well does not reach the specified depth, Company ABC does not make a payment to Company DEF but the data will normally still be provided to Company ABC. T/F 10. In a Bottom-Hole Agreement, Company ABC agrees to pay Company DEF a specified sum if the well being drilled by Company DEF is dry. If the well is not dry, Company ABC does not make a payment to Company DEF but the data will normally still be provided to Company ABC. T/F 11. Delay rentals are costs paid on of before the anniversary date of the lease during the primary term in order to delay drilling for a year. T/F 1. After a company has secured rights to explore in a defined area, the company will research the area extensively to further analyze the underground formation in search for hydrocarbons. T/F 2. Geological and geophysical tests may take the form of seismic studies that measure the reflection of sound waves from beneath the surface from which geophysicists and geologists map or model the underground formation. T/F 3. If the company has not yet acquired rights to explore in an area but would like to do geologic and geophysical testing in that area, it may negotiate with the government or owner of the property to perform testing in exchange for a cash payment, which is referred to as purchasing shooting rights. T/F 4. The costs of geologic and geophysical studies, including seismic and magnetic studies, are expensed as incurred under U.S. GAAP. T/F 5. TSU Oil Company negotiated and acquired the rights to studies of property prior to obtaining a mineral lease, Shooting Rights, for 1,000 acres in Harris County Texas at a rate of $1.00 per acre. The entry under U.S. GAAP is as follows: T/F Intangible assets 1,000 Accounts payable 1,000 The entry under international GAAP is: G&G Expense 1,000 Accounts payable 1,000