VMAC company owns two leases in Brazil. The company’s accountant recorded DD&A Expense of $246,380 using a common unit of measure based on BOE and assuming no exclusions from the amortization. In 2018, the reported oil and gas prices were disproportionate relative to their energy content. VMAC wants you to review the given number and decide whether you agree or disagree with it. Assuming you disagree, provide the appropriate DD&A number to be recorded for 2018 and explain why VMAC should consider it. The company reported the following information at 31/12/2018: Lease A Proved property $ 495,000 Wells & equipment 3,900,000 Lease B Unproved property 180,000 Wells-in-progress 375,000 Proved reserves Oil 600,000 bbl Gas 2,700,000 Mcf Production Oil (sold at $70 per bbl) 30,000 bbl Gas (sold at $5.50 Mcf) 150,000 Mcf Current prices: Oil$75 per bbl Gas$ 6 per Mcf
VMAC company owns two leases in Brazil. The company’s accountant
recorded DD&A Expense of $246,380 using a common unit of measure based
on BOE and assuming no exclusions from the amortization. In 2018, the
reported oil and gas prices were disproportionate relative to their energy
content. VMAC wants you to review the given number and decide whether you
agree or disagree with it. Assuming you disagree, provide the appropriate
DD&A number to be recorded for 2018 and explain why VMAC should
consider it. The company reported the following information at 31/12/2018:
Lease A
Proved property $ 495,000
Wells & equipment 3,900,000
Lease B
Unproved property 180,000
Wells-in-progress 375,000
Proved reserves
Oil 600,000 bbl
Gas 2,700,000 Mcf
Production
Oil (sold at $70 per bbl) 30,000 bbl
Gas (sold at $5.50 Mcf) 150,000 Mcf
Current prices:
Oil$75 per bbl
Gas$ 6 per Mcf
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