In: Accounting
Select the relevant costs and other data from the following, | ||
and calculate the All Source F&D Cost for Big Oil Co. on a BOE basis | ||
(Use a 6 to 1 conversion ratio) | ||
Big Oil Data for All Source F&D Calculation - Oil and Gas | ||
Costs | $Millions | |
Unproved property acquisitions | $75 | |
Exploration | $850 | |
Development expenses | $900 | |
Proved Property Acquisitions | $250 | |
SG&A | $225 | |
Interest payments | $75 | |
Oil Reserve Additions | Million Barrels | |
Oil reserve discoveries and extensions | 105 | MMBO |
Oil revisions | 5 | MMBO |
Acquisitions | 10 | MMBO |
Gas Reserve Additions | Bcf | |
Gas discoveries | 165 | Bcf |
Gas revisions | 5 | Bcf |
Acquisitions | 30 | Bcf |
Calculation of All source Finding & development costs for Big Oil Co.
All source relevant F&D expenses | |
Expense head | Amount (in millions) |
exploration | $850 |
development expenses | $900 |
proved property acquisitions | $250 |
Interest payments | $75 |
Total relevant expenses = $2075 millions
BOE is barrels of oil equivalent per day as per conversion rate of natural gas given. Here One BOE is equal to 6 units of gas So, the conversion table is as follows:-
Head | Oil reserve (barrels in millions) | Gas reserve | BOE | Total BOE including oil barrrels |
Discoveries and extensions | 105 | 165 | 27.5 | 10,50,00,027.50 |
revisions | 5 | 5 | 0.833333 | 50,00,000.83 |
Acquisitions | 10 | 30 | 5 | 1,00,00,005.00 |
Total | 12,00,00,033.33 | |||
BOE = Gas reserve/6 | ||||
Total BOE = BOE + Oil reserve barrels |
All Source F&D costs = total relevant F&D expenses /BOE as calculated
= $2075 million /120 million BOE
= $17 million per unit of barrel of oil