Reference no: EM132575976

Question 1. The SEC requires:

a)all oil & gas companies to make extensive disclosures of reserve information.

b)public companies not to disclose their reserve information so the public would not be misled.

c)public companies to make extensive disclosures of reserve information.

d)public companies to disclose reserve quantities but not the measure of reserve values.

Question 2. Angelview Oil Corp., a successful efforts company, spends $850,000 on G&G activities to locate and explore an oil prospect. The company should:

a)capitalize the $850,000.

b)expense the $850,000.

c)temporarily capitalize the $850,000 to a Well-in-Progress account.

d)capitalize or expense the $850,000 depending on the management's intent.

Question 3. Carbonale Inc. owns a land that is clearly separated from a known accumulation by a nonproductive reservoir.

a)This property is classified as reserves.

b)This property is classified as proved reserves.

c)This property may contain prospective resources if reserve is assigned to adjacent reservoirs.

d)This property is classified as proved undeveloped reserves.

Question 4. Which of the following statements is INCORRECT regarding a top lease?

a)A top lease is a new lease executed before expiration or termination of the existing lease.

b)A two-party top lease involves the current working interest owner.

c)In a two-party top lease, the book value of the old lease will be written off, and only the acquisition costs of the new lease will be capitalized.

d)In a three-party top lease, acquisition costs paid by the new lessee are capitalized.

Question 5. When evaluating whether the unproved properties should be impaired, an E&P company should consider:

a)the expiration of the primary lease term.

b)successful rate on the lease or on nearby leases.

c)future drilling plans.

d)all of the above factors should be considered.