George Oil Corporation drilled a successful gas well. Although capable of production, the well was shut...

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George Oil Corporation drilled a successful gas well. Although capable of production, the well was shut in awaiting the completion of a pipeline, Shut-in royalty payments of $2,000 per month were paid during the months of April through July. Assume the following independent cases: REQUIRED: a. The shut-in royalty payments were not recoverable from future production Give the entry to record payment of the shut-in royalty for April. The shut-in royalty payments were recoverable from future production. Give the entry to record payment of the shut-in royalty for April 13. Lincoln Petroleum has the following data in connection with Lease A: $40,000 400,000 250,000 Proved property cost Drilling cost. Estimated completion cost.. Estimated selling price ($/bbl). Estimated lifting cost (S/bbl). State severance tax rate Royalty interest 100 23 5% 3/16th REQUIRED: Lincoln Petroleum is sole owner of the working interest. If reserves are determined to be 11,000 barrels, is the well profitable? Would the well be profitable if reserves are 16,500 barrels? How many barrels of total production would it take to recover drilling and completion costs? 14. Clark Oil Company has the following expenditures in August 2019: $13,000 Lease A: Well 2-Cleaning and reacidizing formation..... Lease B: Well #3-Testing, perforating, and completion at 10,000 feet. Current production is at 12,000 feet. IDC..... Equipment from inventory REQUIRED: Record the above transactions. Acquisition costs. Drilling and completion costs Selling price of oil (S/bbl) Lifting costs (3/bbl). State severance tax rate Royalty interest 60,000 10,000 15. Tyler Oil Corporation estimates the following costs to acquire, drill, and complete a well on Lease A: $80,000 600,000 1,000 25 5% 20% REQUIRED: Would the investment be profitable if proved reserves are: a. 12,000 bbl? b. 18,000 bbl? c. 24,000 bbl? George Oil Corporation drilled a successful gas well. Although capable of production, the well was shut in awaiting the completion of a pipeline, Shut-in royalty payments of $2,000 per month were paid during the months of April through July. Assume the following independent cases: REQUIRED: a. The shut-in royalty payments were not recoverable from future production Give the entry to record payment of the shut-in royalty for April. The shut-in royalty payments were recoverable from future production. Give the entry to record payment of the shut-in royalty for April 13. Lincoln Petroleum has the following data in connection with Lease A: $40,000 400,000 250,000 Proved property cost Drilling cost. Estimated completion cost.. Estimated selling price ($/bbl). Estimated lifting cost (S/bbl). State severance tax rate Royalty interest 100 23 5% 3/16th REQUIRED: Lincoln Petroleum is sole owner of the working interest. If reserves are determined to be 11,000 barrels, is the well profitable? Would the well be profitable if reserves are 16,500 barrels? How many barrels of total production would it take to recover drilling and completion costs? 14. Clark Oil Company has the following expenditures in August 2019: $13,000 Lease A: Well 2-Cleaning and reacidizing formation..... Lease B: Well #3-Testing, perforating, and completion at 10,000 feet. Current production is at 12,000 feet. IDC..... Equipment from inventory REQUIRED: Record the above transactions. Acquisition costs. Drilling and completion costs Selling price of oil (S/bbl) Lifting costs (3/bbl). State severance tax rate Royalty interest 60,000 10,000 15. Tyler Oil Corporation estimates the following costs to acquire, drill, and complete a well on Lease A: $80,000 600,000 1,000 25 5% 20% REQUIRED: Would the investment be profitable if proved reserves are: a. 12,000 bbl? b. 18,000 bbl? c. 24,000 bbl?

Answer rating: 100% (QA)

aThe entry to record payment of the shutin royalty for April would be Dr Lease expense Shutin royalty payments 2000 Cr Cash 2000 This entry would record the expense of the shutin royalty payment for A... View the full answer