Appendix 3

Illustrative Chart of Accounts

3-1

Illustrative Chart of Accounts

The Illustrative Chart of Accounts is a comprehensive document: it includes categories used by both the successful efforts and full cost methods of accounting. Accounts unique to successful efforts companies are noted by an SE in the left margin, while FC denotes accounts unique to full cost companies. Figure 4-3 located in Chapter 4 presents a condensed version of this chart.

ABC Oil Company Chart of Accounts

100-109 101 102 105 106 107 110-119 110 111 120 - 129 120 121 Cash Cash in First National Bank Cash in First State Bank Special Deposits Payroll Account Petty Cash Short-Term Investments Marketable Securities Overnight Interest-Bearing Accounts

Accounts Receivable Accounts ReceivableOil and Gas Sales Accounts ReceivableGas Imbalances (if using entitlement method) 122 Accounts ReceivableGas Marketing 123 Accounts ReceivableJoint Interest Billings 124 Accounts ReceivableEmployees 126 Accounts ReceivableOther Receivables 127 Accrued Receivables 127.001 Oil and Gas Sales 127.002 Accrued Interest 127.003 Other 129 Allowance for Doubtful Accounts Inventories Inventory of Crude Oil (account used infrequently) Inventory of Natural Gas Held in Storage Inventory of Materials and Supplies Field Yards (detailed by location and type of material) Trucking Yards (detailed by location and type of material) Warehouse Inventories (detailed by location and type of material) Lower-of-Cost-or-Market Reserve Other Current Assets Prepaid Expenses Current Portion of Long-Term Receivables Margin Accounts for Futures Trading Other Unproved Property Acquisition Costs* Unproved Property Purchase Suspense (detailed by project) Unproved Property Acquisition Costs Lease Bonus Commissions Landman Services and Expenses

130 -139 130 131 132 132.001 132.002 132.003 132.004 140-149 140 141 142 143 210-219 210 211 211.001 211.002 211.003

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Illustrative Chart of Accounts

Appendix 3

FC FC 219

211.004 211.005 211.006 211.007 211.999

Abstracting Fees Capitalized Interest Delay Rentals Other Carrying Costs Transfers to Proved Mineral Interests Allowance for Impairment of Unproved Properties (detailed by property or by groups of properties as appropriate)
Additional unproved property accounts may be used for other types of economic interests, such as Account 212 for fee interests, Account 213 for royalty interests, Account 214 for overriding royalty interests, Account 215 for net profits interests, and Account 216 for volume production payments. *Note: The conventional term unproved property refers to unevaluated property. Once a property is evaluated as not having proved reserves, the capitalized acquisition costs are either: (1) expensed under the successful efforts method to Account 800, Exploration Expenses, or (2) reclassified using full cost accounting to Account 227, Abandoned and Worthless Property.

220-226 221

Proved Property Acquisition Costs Proved Property Acquisition Costs (detailed by lease)
Additional proved property accounts may be used for other types of economic interests, such as Account 222 for fee interests, Account 223 for royalty interests, and Account 224 for overriding royalty interests.

SE

225 226 227-229 227 228 229 230- 239 230 231 231.001 231.001 231.002 231.003 231.004 231.005 231.006 233.001 233.001 233.002 233.003 233.004 233.005 233.006 233.007 233.008 233.009

Proved Production Payments Accumulated Amortization of Proved Property Acquisition Costs (detailed by property interest or by geological structure) Capitalized Costs of Unsuccessful Efforts Abandoned and Worthless Properties Impairment of Unproved Properties Unsuccessful Exploration Costs Proved Property Well and Development Costs Capitalized Asset Retirement Obligations (ARO) at Inception Intangible Costs of Wells and Development (detailed by well or field) Well Drilling and Completion Successful Exploratory Wells Successful Development Wells Development Dry Holes Intangible Capitalizable Workover Costs (infrequently used; workovers are generally repairs that are expensed as production costs) Enhanced Recovery Projects Other Intangibles Accumulated Amortization of Intangible Costs of Wells and Development Tangible Costs of Wells and Development (detailed by well or field) Well Drilling and Completion Successful Exploratory Wells Successful Development Wells Development Dry Holes Tangible Workover Costs (infrequently used) Development Support Equipment and Facilities Gas Processing Facilities (may be a separate section) Enhanced Recovery Projects Other Field Equipment Allocated Tangible Cost of Acquired Properties Accumulated Amortization of Tangible Costs of Wells and Development Accumulated Amortization of Capitalized ARO Costs Accumulated Amortization of Oil and Gas Property Acquisition, Exploration, and Development

FC FC FC

FC SE SE SE

SE FC SE SE SE

232 233

SE FC

234 235 236

Appendix 3

Illustrative Chart of Accounts

3-3

FC FC

237 238 240-249 240 240.001 240.002 240.003 240.004 240.005 240.006 240.007 240.008 240.009 240.010 240.011 240.012 240.015 241 241.001 241.002 241.003 241.004 241.005 241.006 241.007 241.008 241.009 241.010 241.011 241.012 241.013 241.014 241.015 241.016 241.017 241.018 241.019 241.025 241.028 241.029 243 243.030 243.031 243.032 243.033 243.034 243.035 243.036 243.037 243.038 243.045 243.048 243.049 244 245 246 247 248

Accumulated Impairment of Oil and Gas Property Cost Centers (by country) Deferred Losses (Gains) on Sales of Properties Work in Progress Work in ProgressGeological and Geophysical Exploration (detailed by project or AFE) Geological and Geophysical Contract Work Geological and Geophysical Services Other Field Party Salaries and Wages Field Party Supplies Other Field Party Expenses Charges for Support Facilities Shooting Rights and Damages Mapping Expenses Equipment Rental Other Geological and Geophysical Costs Purchased Geological and Geophysical Data Overhead Transfers to Exploration Expense Work in ProgressIntangible Costs of Wells and Related Development (detailed by AFE) Drilling Contract Site Preparation, Roads, Pits Bits, Reamers, Tools Labor, Company Labor, Other Fuel, Power, Water Drilling Supplies Mud and Chemicals Drill Stem Tests Coring, Analysis Electric Surveys, Logs Geological and Engineering Cementing Completion, Fracturing, Acidizing, Perforating Rig Transportation, Erection, Removal Environmental and Safety Other Services Overhead Miscellaneous Capitalized Interest Transfers to Exploration ExpenseDry Holes Transfers to Proved Property Well and Development Costs Work In ProgressTangible Costs of Wells and Related Development Tubular Goods Wellhead and Subsurface Equipment Pumping Units Tanks Separators and Heater-Treaters Engines and Power Equipment Flow Lines Miscellaneous Installation CostsSurface Equipment Capitalized Interest Transfers to Exploration ExpenseDry Holes Transfers to Proved Well and Development Costs Work in ProgressWorkovers^ (usually a production expense) Work in ProgressSupport Equipment and Facilities^ Work in ProgressGas Processing Facilities^ Work in ProgressEnhanced Recovery Projects^ Work in ProgressOther Field Equipment (^ Subaccounts are not illustrated.)

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Illustrative Chart of Accounts

Appendix 3

258-259 258 259 260-269 261 262 263 264 268 269 270-279 270 271 272 273 274 280-289 280 281 282 283 284 289 290-299 290 291 292 293 300-349 301 302 303 304 305 306 307 310 311 320 321 330 331 332 335 350-369 350 351 352 360

General Support Equipment and Facilities Cost of General Support Equipment and Facilities (detailed by facility or unit) Accumulated Depreciation of General Support Equipment and Facilities (detailed by facility or unit) Other Plant and Equipment (detailed by asset and location) Autos Office Equipment Buildings Land Other Accumulated Depreciation (detailed by type of equipment and by asset) Notes Receivable Notes ReceivableTrade Notes ReceivableProduction Payments Notes ReceivableCo-owners Notes ReceivableOfficers and Employees Notes ReceivableOther Other Assets Pipeline Demand Charges Stock of Subsidiaries Other Stock Investments Cash Surrender Value of Life Insurance Investments in Hedging Instruments Other Deferred Charges Deferred Tax Asset Deferred Loss on Hedging of Future Production Deferred Expenses Recoverable Under Foreign Production Sharing Contracts Other Deferred Charges Current Liabilities (appropriately detailed in subaccounts) Vouchers Payable Revenue Distributions Payable Lease Bonuses Payable Revenues Held in Suspense Advances from Joint Interest Owners Gas Imbalance Payables (if using entitlement method) Accrued Liabilities Short-Term Debt Current Portion of Long-Term Debt Production Taxes Payable Ad Valorem Taxes Payable Federal Income Taxes Payable State Income Taxes Payable Payroll Taxes Payable Other Current Liabilities Clearing, Apportionment, and Control Accounts District Expenses Region Expenses Support Facility Expenses Revenue Control Account

Appendix 3

Illustrative Chart of Accounts

3-5

361 400-409 401 402 403 404 405 406 407 408 409 410-419 410 411 412 420 430-439 430 431 432 433 500-599 500 501 505 525 530 600-699 601 602 603 604 605 606 607 610 615 620 625 630 701-709 701 702 703 710 710

Billing Control Account Long-Term Debt Notes Payable Mortgages Payable Bonds Payable Production Payments Payable as Debt Commercial Paper Capitalized Lease Obligations Debt Premium Debt Discount Portion Reclassified as Current Other Long-Term Liabilities Asset Retirement Obligation (ARO) Other Environmental Liabilities Accrued Pension Liability Deferred Income Taxes Other Deferred Credits Deferred Revenue for Prepaids Deferred Revenue for Volume Production Payments Deferred Gain (for future commitments on certain property sales) Deferred Gain on Hedging of Future Production Stockholders Equity Preferred Stock Common Stock Additional Paid-In Capital Retained Earnings Dividends Revenues (typically presented net of royalties due to others) Crude Oil Revenues Gas Revenues NGL Revenues Royalty Oil Revenues Royalty Gas Revenues Royalty NGL Revenues Revenues from Net Profits Interests Gain (Loss) on Hedging the Companys Revenues (using futures, options, derivatives, etc.) Gain (Loss) on Trading of Futures, Options, and Derivatives (speculative trades) Gains on Property Sales (rarely used for full cost method) Interest Income Other Income Marketing Expenses Oil Marketing Expenses Gas Marketing Expenses NGL Marketing Expenses Lease Operating Expenses Lease Operating Expenses Salaries and Wages Employee Benefits Contract Pumping Services Well Services and Workovers Repairs and Maintenance of Surface Equipment

710.001 710.002 710.003 710.004 710.005

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Illustrative Chart of Accounts

Appendix 3

710.006 710.007 710.008 710.009 710.010 710.011 710.012 710.013 710.014 710.015 710.016 710.017 710.018 710.019 710.020 710.021 710.022 725-749 725 726 732 734 735 739 749 760-761 760 761

Fuel, Water, and Lubrication Supplies Auto and Truck Expenses Supervision Ad Valorem Taxes Production Taxes and Severance Taxes Other Taxes Compressor Rentals Insurance Salt Water Disposal Treating Expenses Environment and Safety Overhead Shut-in and Minimum Royalties Other Royalties (where appropriate) Pressure Maintenance Other DD&A Depreciation, Depletion, and Amortization Amortization of Proved Property Acquisition Costs Amortization of Intangible Costs of Wells and Development Amortization of Tangible Costs of Wells and Development Amortization of Capitalized Asset Retirement Obligations Depreciation of General Support Equipment and Facilities Depreciation of Other Plant and Equipment Loss on Impairment of Long-Lived Assets Loss on Impairment of Long-Lived Assets Provision for Impairment of Oil and Gas Assets Exploration Expenses Geological and Geophysical Expenses Geological and Geophysical Contract Work Geological and Geophysical Services Other Field Party Salaries and Wages Field Party Supplies Other Field Party Expenses Shooting Rights and Damages Mapping Expenses Equipment Rental Other Geological and Geophysical Costs Purchased Geological and Geophysical Data Overhead Carrying and Retaining Undeveloped Properties Rentals (also called Delay Rentals) Ad Valorem Taxes Title Defense Record Maintenance Test Well Contributions Dry Hole Costs Bottom-Hole Costs Unsuccessful Exploratory Wells (i.e., Dry Holes) Intangibles Tangibles Unsuccessful Exploratory Stratigraphic Test Wells Intangibles Tangibles Impairment, Amortization and Abandonment of Unproved Properties

FC SE SE SE

FC

SE 800-899 SE 801 801.001 SE 801.002 SE 801.003 SE 801.004 SE 801.005 SE 801.007 SE 801.008 SE 801.009 SE 801.010 SE 801.011 SE 801.012 SE SE 802 802.001 SE 802.002 SE 802.003 SE 802.004 SE SE 803 803.001 SE 803.002 SE SE 804 804.001 SE 804.002 SE SE 805 805.001 SE 805.002 SE SE 806

Appendix 3

Illustrative Chart of Accounts

3-7

900-919 901 902 903 904 905 906 907 908 909 910 911 912 918 919 920-929 920 921 922 923 924 930 931 933 940-949 940 941 942 945 946 947 960

General and Administrative Expenses Officers Salaries Other Salaries Employee Benefits Rent Office Supplies Utilities Dues and Subscriptions Travel and Entertainment Legal and Auditing Insurance Taxes Other Than Income Contributions Miscellaneous G&A Expense Operators Overhead Recovery Interest Expense Interest on Debts Other Interest Gain (Loss) on Hedging of Interest Expense Transfer for Interest Capitalized Accretion Cost on Asset Retirement Obligations Losses on Sales of Property Provisions for Restructuring Casualty Loss Income Tax Provision Current Federal Income Taxes Current State and Local Income Taxes Current Foreign Income Taxes Deferred Federal Income Taxes Deferred State and Local Income Taxes Deferred Foreign Income Taxes Extraordinary Items

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Illustrative Chart of Accounts

Appendix 3

Note: Revenues, taxes, and lease activities often must be tracked or summarized by state. The American Petroleum Institute (API) designated the following standardized numerical codes to facilitate such tracking:

API CODE FOR THE UNITED STATES AND OFFSHORE FEDERAL WATERS

01 Alabama 02 Arizona 03 Arkansas 04 California 05 Colorado 06 Connecticut 07 Delaware 08 District of Columbia 09 Florida 10 Georgia 11 Idaho 12 Illinois 13 Indiana 14 Iowa 15 Kansas 16 Kentucky 17 Louisiana 18 Maine 19 Maryland 20 Massachusetts

21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40

Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota

41 42 43 44 45 46 47 48 49 50 51 55 56 60 61

Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming Alaska Hawaii Alaska Offshore Pacific Coast Offshore Northern Gulf of Mexico Atlantic Coast Offshore