Accounting for Net Profit Share Leases

摘要

The amended Outer Continental Shelf Lands Act called for the development of alternative leasing systems for offshore oil and gas properties. A published report describes the net profit share system that was used in the leasing of a number of tracts in the September 1980 lease sale. One of the primary considerations in calculating a bid under this system is the accounting method that is used for the determination of the profits to be shared with the United States Government. This report presents a discussion of the accounting system adopted for the fixed capital-recovery/net profit share system under the new Federal regulations. The report includes discussions of the conceptual background of the net profit share leasing system and of the mechanics of the accounting system, together with the management decisions that need to be made over the life of the lease with respect to the accounting system. Also included is a discussion of the major differences between allowed costs under the Council of Petroleum Accounting Societies Accounting Bulletin No. 16 and the costs allowed in this system. Finally, a case study is presented to illustrate the use of the system. (ERA citation 06:023128)