Assumed from the Production Accounting example the following: The Shepherd Field is jointly owned by Tyler Company (60% WI), which acts as field operator, and Our Oil Company (40% WI). There is a 1/8 royalty, which is shared proportionally by Tyler and Our Oil Company. Gas price for the month is $4.50/Mmbtu. Assume production taxes were 5%.

 Based on gas analysis the heating content is 1.03 Btu.

• What is the value of gas sales?

• What is the amount of gross revenue Tyler Oil Company & Our Oil Company should record?

• What is the gross amount should Tyler Oil Company & Our Oil Company record for their proportionate share of royalty and severance tax?

• What amount of gross revenue, royalty, severance taxes and net revenue should Tyler Company record for each lease (A-B-C-D-E-F)?

• Provide the revenue entry by Tyler Company if PURCHASER assumes the responsibility of distributing severance taxes and royalty.

• Provide the revenue entry by Our Oil if PURCHASER assumes the responsibility and receives 100% of the proceeds

Answer rating: 100% (QA)

To calculate the value of gas sales we need to know the production volume of gas Lets assume the production volume for the month is X Mmbtu 1 Value of ... View the full answer