Question
Costs incurred by Cosmos Company on oil and gas properties located in Ghana as of December 31, 2021, were as follows: Proved property costs .
Costs incurred by Cosmos Company on oil and gas properties located in Ghana as of December 31, 2021, were as follows: Proved property costs . . . . . . . . . . . . . . . . . . . .$ 40,000 Unproved property costs . . . . . . . . . . . . . . . . . 70,000 Non-drilling exploration costs, proved properties . . . . 80,000 Non-drilling exploration costs, unproved properties. . . .100,000 Drilling costs, proved properties . . . . . . . . . . . . . 400,000 Wells-in-progress, unproved properties . . . . . . . . . . .600,000 Dry holes, unproved properties . . . . . . . . . . . . . . .900,000 Total accumulated DD&A . . . . . . . . . . . . . . . . (490,000) Total capitalized costs, net of DD&A . . . . . . . . . . $1,700,000 Other Data: Future development costs . . . . . . . . . . . . . . . . . .$ 300,000 Future decommissioning costs (on future development projects) 400,000 Proved reserves, 12/31/11, bbl . . . . . . . . . . . . . . . .500,000 Production during year, bbl . . . . . . . . . . . . . . . . .100,000
Required: Using the Unproved Property Inclusion and Exclusion method, Calculate DDA using the inclusion method DDA using the exclusion method As an accountant working at Cosmos energy, kindly write a memo to the finance Director indicating how you arrived at the differences in the computation of DDA using both methods b. what is the difference between a successful well and a dry hole.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started