1. falcon Energy Corp. has the following financial information.

Proved property cost (acquisitioncost)$35,000

Drilling cost incurred todate450,000

Estimated selling price perbbl$80

Estimated lifting costs per bbl $35

State severancetax6%

Royalty interestpercentage14%

Estimated total grossproduction20,000 bbl

What is the maximum completion cost, for which Falcon Energy Corp may consider completing the project?

A.$143,440.

B.$270,000.

C.$580,000.

D.$593,440.

2.When preparing a reserve estimate, a reservoir engineer should not take into account:

A.the size of the reservoir.

B.the porosity and permeability of the reservoir.

C.the cost to complete the well.

D.pressure and temperature in the reservoir.

3.Pumpking Oil Co. hires Mary Jones as an operation center supervisor of several leases. Mary's salary could be:

A.capitalized and amortized over the lifetime of the operation center.

B.allocated as a production expense to the leases on the basis of Mary's work hours for each lease.

C.directly traced to individual wells and leases.

D.expensed for each lease at the amount divided by the number of leases.

4.Which of the following costs is NOT considered as a production cost for an oil and gas company?

A.Repairs and maintenance of wells.

B.Property taxes.

C.Officers' salaries.

D.Severance taxes.

5.Which of the asset retirement obligation components is required to disclose in company's financial statement?

A.liabilities incurred in the current period.

B.liabilities settled in the current period.

C.accretion expenses.

D.All of the above should be disclosed.

6.Dumas Energy Co. pays $100,000 for an asset with a 10-year useful life to be used in its oil field. The company estimates that the asset retirement obligation associated with this asset is $10,000. As of this acquisition, the company's long-lived asset account increases:

A.$90,000.

B.$100,000.

C.$101,000.

D.$110,000.

7.When an asset is retired and the associated asset retired obligation is settled, the difference between the ARO liability and the amount actually incurred should:

A.be recognized as a loss.

B.be recognized as a gain.

C.be recognized as either a gain or loss.

D.be ignored and neither a gain nor a loss is recognized.