By the end of this course, delegates will be able to:

• Learn the terminology and appreciate the financial reporting considerations in IFRS financial statements of oil and gas companies
• Interpret and apply relevant accounting policies and standards (IFRS 6 Exploration for and Evaluation of Mineral Resources, IAS 16 Property, Plant and Equipment, IAS 38 Intangible Assets, IAS 36 Impairment of Assets), including analysis of issues in exploration, drilling, development and production stages
• Apply the key accounting principles in IFRS 15 Revenue, IFRS 16 Leases and IFRS 9 Financial Instruments, including managing financial risks in oil and gas entity
• Review the accounting for joint arrangements, production sharing contracts and conveyances
• Analyse the disclosures in financial statements including those relating to reserve data and supplemental disclosures
• Apply the principles in relation to acquisition accounting and those in relation to definition of control to determine if the investee should be consolidated
• Analyse and interpret IFRS financial statements of oil and gas companies

The course is useful for preparers and users of IFRS financial statements of oil and gas companies, including those seeking a comprehensive understanding of the key IFRS accounting issues in the industry. This includes staff in finance, treasury, operations, internal and external auditors, analysts, senior management and executives.

A basic understanding of financial statements under any GAAP is a pre-requisite.

We facilitate learning through a combination of techniques listed below:

• Pre-workshop questionnaire for participants to confirm their expectations
• Presentation of core knowledge and concepts including group discussions
• Real-world case studies to enable learning by doing
• Short case studies to confirm achievement of learning outcomes

Day 1

Module 1: Introduction

• Overview of oil and gas operations
• Definition of reserves

Module 2: IFRS Fundamentals for Oil and Gas and Accounting Issues in Exploration

• Overview of financial reporting considerations
• IAS 16 Property, plant and equipment and IAS 38 Intangible Assets: Initial recognition and subsequent measurement, depreciation/amortisation methods
• Upstream business: Successful efforts vs Full cost methods, IFRS 6 accounting approach
• Accounting issues in exploration and evaluation: Pre-exploration costs, non-drilling exploration costs, dry holes, impairment of unproved property, reclassifications, suspended wells

Day 2

Module 3: Development and Production

• Accounting issues in development
• Treatment of borrowing costs: Capitalisation vs Expensing
• Provisions and asset retirement obligations
• Accounting issues in production
• Measurement of inventories

Module 4: Leases

• Objective and scope of IFRS 16
• Lease and non-lease components
• Optional recognition exemptions
• Initial recognition and subsequent measurement by lessee
• Overview of lessor accounting

Module 5: Impairment of Non-Financial Assets

• Indicators of impairment
• Impairment of exploration and evaluation, development and production assets
• Determination of recoverable amount
• Cash generating unit vs individual asset impairment
• Reversals of impairment
• Disclosures

Day 3

Module 6: Revenue Recognition

• Core principle
• The five-step framework and application guidance
• Application to oil and gas companies

Module 7: Joint Arrangements and Accounting for Conveyances

• Joint operation vs joint venture
• Overview of production sharing contracts
• Accounting for conveyances in oil and gas

Module 8: Reserves Reporting

• Supplementary disclosure requirements
• Management commentary
• Exploration, development and production costs
• Proved oil and gas reserve quantities
• US SEC vs IFRS
• Standardised measure of discounted future net cash flows
• Reserves ratios

 Day 4

Module 9: Financial Instruments and Financial Risk Management

• Overview of financial risks in oil and gas entity
• IAS 21 Effects of changes in foreign exchange rates
• IAS 32 Presentation of Financial Instruments: Financial liability vs Equity
• IFRS 9 Classification and Measurement: Classification of financial assets and financial liabilities, Amortized cost vs Fair value
• Overview of derivatives and hedging
• Hedge accounting: Types of IFRS 9 hedges and accounting
• Designating hedged items and hedging instruments
• Hedge effectiveness testing and rebalancing
• Discontinuation of hedge accounting
• Fair value option: own use

Module 10: Business Combinations and Consolidation

• IFRS 3 Accounting for acquisitions
• IFRS 10 Application of the definition of “control” and consolidation accounting principles

Review Quiz

RECTUS attendance certificate will be issued to all attendees completing minimum of 80% of the total course duration