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Fundamentals of Oil & Gas Accounting 5th Edition by Rebecca Gallun, Charlotte Wright
Edition 5ISBN: 9781630181031Fundamentals of Oil & Gas Accounting 5th Edition by Rebecca Gallun, Charlotte Wright
Edition 5ISBN: 9781630181031 Exercise 27
Mabel Oil Company owns 100% of the working interest in a lease that has a 1/7 royalty
interest. The royalty interest owner is Mr. Kyle. Needing additional funds to develop
the property, Mabel sold Pitt Company 60,000 barrels of oil for a consideration of
$800,000. The oil is to be paid out of the first 20% of the working interest's share of
production. During the first four years of production, 140,000 barrels are produced
each year. How many barrels of oil does each interest receive in each of the first
four years?
interest. The royalty interest owner is Mr. Kyle. Needing additional funds to develop
the property, Mabel sold Pitt Company 60,000 barrels of oil for a consideration of
$800,000. The oil is to be paid out of the first 20% of the working interest's share of
production. During the first four years of production, 140,000 barrels are produced
each year. How many barrels of oil does each interest receive in each of the first
four years?
Explanation
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During the first year of production, the...
Fundamentals of Oil & Gas Accounting 5th Edition by Rebecca Gallun, Charlotte Wright
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