CHAPTER 12 Accounting for Revenue from Oil and Gas Sales 12 421 Information from a run ticket shows that 2.000 net barrels of oil with an API gravity of 36 were sold. The selling price is based on a contract price of $90/bbl. adjusted downward 4 for each degree of gravity less than 40'. REQUIRED: Compute the selling price for the 2,000 barrels. 29. Hays Oil Company is a new successful efforts company located in New Mexi During September 2020, Hays Oil Company sold 2,000 Mcf of gas at 14.65 with a heat content of 1.030 MMBtu/Mcf at 14.73 psia. The selling price of the gas was $8.80/MMBtu. REQUIRED: a. Convert Mcf to a standard pressure of 14.73 psia and determine the MMB for the gas sold. b. Convert MMBtu/Mcf to a standard pressure of 14.65 psia and determine the MMBtus for the gas sold. c. Determine the sales price of the gas sold. Sam Field, located in northern Alaska, is jointly owned by Smith Company (60% WI) and Joyner Company (40% WI). Smith, which is the operator, estimates that gross gas production during July will be 40,000 Mcf. Smith Company makes confirmed nominations of 30,000 Mcf, and Joyner Company makes confirmed nominations of 10,000 Mcf to a pipeline company. Actual July production totals 50,000 Mcf. Assume that the appropriate price is $10.80/Mcf. REQUIRED: Determine the number of Mcfs of actual production to be allocated to each party, along with each producer's resulting overdeliveries and underdeliveries to the pipeline, using the following: a. The confirmed nominations method b. The entitlement method arp Field is jointly owned by G Tharp Field 28. and Garza Company (30% WI). Th operator, and a shared proportionally by Gay have agreed that Gavin's nu urchaser will take gas produce September. Assume each w owned by Gavin Company (70% WI), which acts as field any (30% WI). There is a 1/6 royalty. The 1/6 royalty Gavin and Garza. The two working interest owners vin's purchaser will take gas produced in July, and Garza's gas produced in August. Gas allocations will be equalized in e each working interest owner receives payment only for gas delivered to his pur Gross production and od to his purchaser(s). Ignore severance taxe oduction and gas prices were as follows: Price July August September Production 100,000 Mcf 120,000 Mcf 190,000 Mcf $8.00/Mcf 8.00/Mcf 8.00/Mcf FUNDAMENTALS OF OIL & GAS ACCOUNTING REQUIRED: a. Prepare the gas balance report for Gavin Company to summarize the production deliveries and equalization of gas for July through September b. Prepare the journal entries for each company during the three-month period assuming that both companies use the sales method for both revenue and royalty. c. Prepare the journal entries for each company during the three-month period, assuming that both companies use the entitlement method for both revenue and royalty
