Natural Resources

Project Objective:

The objective of this project is to develop an accounting standard for the oil and gas natural resources owned by or under the stewardship of the federal government. Specifically, to determine under what conditions a value and a quantity should be measured and reported for oil and gas, how revenue and the related costs should be recognized and measured, and what disclosures or supplemental information are essential to meeting the reporting objectives. The accounting standards for oil and gas shall be developed to meet the federal financial reporting objectives (SFFAC 1), subject to the pervasive constraint that benefits exceed cost.

Exposure Draft Comment Letters Final Standard
Accounting for Federal Oil and Gas Resources (PDF) – DRAFT Comment Letters (PDF) SFFAS 38, Accounting for Federal Oil and Gas Resources (PDF) – FINAL
Deferral of the Effective Date of SFFAS 38 , Accounting for Federal Oil and Gas Resources (PDF) – DRAFT Comment Letters SFFAS 41, Deferral of the Effective Date of SFFAS 38, Accounting for Federal Oil and Gas Resources (PDF) – FINAL
Technical Bulletin 2011-1 , Accounting for Federal Natural Resources Other Than Oil and Gas (PDF) – DRAFT Comment Letters Technical Bulletin 2011-1, Accounting for Federal Natural Resources Other Than Oil and Gas (PDF) – FINAL

HISTORY OF BOARD DELIBERATIONS (reverse chronology)

June 22-23, 2011 Board Meeting

On July 6, 2011, FASAB issued Statement of Federal Financial Accounting Standards (SFFAS) 41, Deferral of the Effective Date of SFFAS 38, Accounting for Federal Oil and Gas Resources. SFFAS 41 defers the effective date of SFFAS 38, which requires the federal government to report its royalty share of estimated oil and gas production from federal proved reserves and the portion of that share to be distributed to others as required supplementary information (RSI), for one year to reporting periods beginning after September 30, 2012 (i.e., fiscal year 2013).  Earlier implementation is encouraged.

In addition, also on July 6, 2011, FASAB staff issued Technical Bulletin 2011-1, Accounting for Federal Natural Resources Other than Oil and Gas, clarifying that federal entities should report the value of the federal government’s estimated royalties and other revenue from federal natural resources that are (1) under lease, contract or other long-term agreement and (2) reasonably estimable as of the reporting date in RSI, consistent with the guidance contained in SFFAS 38.

Further research on the Natural Resources project will be suspended until the board revisits reporting under SFFAS 41 and Technical Bulletin 2011-1 after three years’ of reporting experience to determine if the information required by these two pronouncements should move to basic information as recognition in the financial statements or disclosure in the notes, or remain as RSI.

April 27-28, 2011 Board Meeting

FASAB continued deliberations on the following two different draft pronouncements:

  1. Proposed Standard – Deferral of SFFAS 38 for One Year

Prior to the April board meeting, the board members unanimously approved Proposed Statement of Federal Financial Accounting Standards (SFFAS) 41, Deferral of the Effective Date of SFFAS 38, Accounting for Federal Oil and Gas Resources.  The proposed standard was transmitted to FASAB’s sponsors for a 90-day review period beginning on April 6, 2011.  Staff anticipates that SFFAS 41 will be issued as final in early July 2011.

  1. Proposed Technical Bulletin – Applying SFFAS 38 to Other Types of Natural Resources

At the April 28, 2011, board meeting, members discussed the revised comment letter received from the Department of the Interior (DOI) on the exposure draft of Technical Bulletin 2011-1, Accounting for Federal Natural Resources Other than Oil and Gas.  In addition, two representatives from DOI met with the board to answer questions about its revised comment letter and discuss plans for implementing the requirements of the proposed Technical Bulletin.  In DOI’s revised comment letter, DOI requested that the effective date of the proposed Technical Bulletin be extended by one year to fiscal year 2014, because the same staff that would be devoted to developing the estimate for SFFAS 38 would also be the ones determining what needs to be done to comply with the proposed technical bulletin.

A majority of the members approved the one-year extension and directed staff to continue with issuance of the proposed Technical Bulletin.  Staff anticipates that the technical bulletin will be issued in early July 2011.

Issue Paper for April 2011 –  Tab G – April 2011.pdf, Tab G – 2 April -2.pdf

February 23-24, 2011 Board Meeting
FASAB continued deliberations on the following two different draft pronouncements:

1. Exposure Draft of a Standard — Deferral of SFFAS 38 for One Year

At the February 23, 2011, board meeting, members discussed the comments received on the Exposure Draft, Deferral of the Effective Date of SFFAS 38, Accounting for Federal Oil and Gas Resources. The members directed staff to begin the process of finalizing the standard.

2. Exposure Draft of a Technical Bulletin – Applying SFFAS 38 to Other Types of Natural Resources

At the February 24, 2011, board meeting, members discussed the comments received on the Exposure Draft, Technical Bulletin 2011-1, Accounting for Federal Natural Resources Other than Oil and Gas. At that meeting, several board members expressed significant concern about the potential cost of the proposal based on the Department of the Interior’s (DOI) letter and the conflicting views presented by DOI bureaus. The members asked for additional information from DOI. Staff has asked DOI to clarify their response to the Exposure Draft and invited representatives from DOI to the April meeting to allow the board members to ask questions about DOI’s response.

Issue Papers for February 2011

December 16-17, 2010 Board Meeting
The following two separate Exposure Drafts related to the natural resources project are currently open for comment – a proposed standard and a proposed technical bulletin:

1. Exposure Draft of a Standard — Deferral of SFFAS 38 for One Year

On November 18, 2010, the Department of the Interior’s (DOI) Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE, formerly part of the Minerals Management Service (MMS)) formally requested that FASAB consider deferring the effective date of Statement of Federal Financial Accounting Standards (SFFAS) 38, Accounting for Federal Oil and Gas Resources, for one year. The request explained that a variety of issues and challenges have arisen as a direct result of a major reorganization of MMS that will greatly complicate the implementation of SFFAS 38 for fiscal year 2012.

At the December 16, 2010, meeting, members considered BOEMRE’s request and discussed a draft exposure draft of a standard that would defer the effective date of SFFAS 38 for one year. If approved, the new effective date of SFFAS 38 would be for periods beginning after September 30, 2012 (i.e., fiscal year 2013).

While a reorganization in and of itself would not normally be a justification for deferring a standard, members noted that the nature and extent of the MMS reorganization goes above and beyond what would be considered within the normal course of operations. The board unanimously supported the proposal but emphasized that earlier implementation is encouraged and strongly urged that the standard be implemented for fiscal year 2012 if at all possible. Staff emailed a ballot draft to members on Thursday, December 23, 2010.

Chairman Allen announced the release of the Exposure Draft, Deferral of the Effective Date of SFFAS 38, Accounting for Federal Oil and Gas Resources, on January 5, 2011. The Exposure Draft may be accessed directly from the FASAB website at http://www.fasab.gov/exposure.html. Comment letters are due February 7, 2011, and will be discussed at the February FASAB meeting.

2. Exposure Draft of a Technical Bulletin – Applying SFFAS 38 to Other Types of Natural Resources

At the October 28, 2010, meeting, staff presented a draft Exposure Draft of a technical bulletin that proposes to apply the concepts from SFFAS 38, Accounting for Federal Oil and Gas Resources, to other types of non-renewable natural resources under lease, contract, or other long-term agreement and reasonably estimable as of the reporting date. After the meeting, FASAB staff incorporated member comments and submitted the draft to DOI for a fatal flaw review. Staff then incorporated DOI’s comments and submitted the revised Exposure Draft to members for a 15-day review period. None of the members objected to the release of the Exposure Draft for comment.

Wendy Payne, Executive Director, announced the release of the Exposure Draft, Technical Bulletin 2011-1, Accounting for Federal Natural Resources Other than Oil and Gas, on January 5, 2011. The Exposure Draft may be accessed directly from the FASAB website at http://www.fasab.gov/exposure.html. Comment letters are due January 31, 2011, and will be discussed at the February FASAB meeting.

Issue Paper for December 2010

October 27-28, 2010 Board Meeting
At the October 28, 2010, meeting, staff presented a draft exposure draft of Technical Bulletin 2011-1, Accounting for Federal Natural Resources Other than Oil and Gas. The Technical Bulletin proposes to apply the concepts from SFFAS 38, Accounting for Federal Oil and Gas Resources, to other types of natural resources under lease, contract, or other long-term agreement and reasonably estimable as of the reporting date. The board approved moving forward with the proposed technical bulletin. Staff will incorporate members’ comments from the meeting, submit the draft to the Department of the Interior for a fatal flaw review, and then send a revised exposure draft to the board for an additional review period before releasing it for comment. Staff expects to release the exposure draft for comment on or around January 5, 2011.

Issue Paper for October 2010

August 25-26, 2010 Board Meeting
Staff is drafting a technical bulletin to address accounting for other types of federal natural resources beyond oil and gas.

June 23-24, 2010 Board Meeting
Staff is drafting a technical bulletin to address accounting for other types of federal natural resources beyond oil and gas.

April 28-29, 2010 Board Meeting
SFFAS 38, Accounting for Federal Oil and Gas Resources, was issued as final on April 13, 2010.  The final standard may be downloaded from the Pronouncements, As Amended page on FASAB’s website at http://www.fasab.gov/codifica.html.

Staff has begun drafting a technical bulletin to address accounting for other types of federal natural resources beyond oil and gas.

February 24-25, 2010 Board Meeting
SFFAS 38, Accounting for Federal Oil and Gas Resources, was transmitted to FASAB’s sponsors on January 12, 2010, for a 90-day review period.  Staff anticipates that SFFAS 38 will be issued as final on April 13, 2010.

Staff will begin drafting a technical bulletin to address accounting for other types of federal natural resources beyond oil and gas.

December 16-17, 2009 Board Meeting
At its meeting on December 16, 2009, the Board discussed the final draft of the oil and gas standard presented by staff.  After making several editorial changes, the Board members approved the standard.  Staff anticipates that SFFAS 38, Accounting for Federal Oil and Gas Resources, will be issued as final in April 2010 following a 90-day review period by FASAB’s sponsors.

Issue Paper for December 2009 (PDF)

October 21-22, 2009 Board Meeting
At the October 21, 2009, meeting, the majority of the board voted to (1) require that the information in the proposed standard on accounting for federal oil and gas resources be reported as required supplementary information (RSI) for three years, and (2) after experimentation with RSI the board would decide whether the asset value should be recognized in the financial statements or disclosed in the notes.  The board will use the experience gained by the U.S. Department of the Interior during the RSI period to inform their decision regarding financial statement recognition versus note disclosure.  The board unanimously agreed to broaden the acceptable alternative measurement methods during the RSI phase to allow for greater flexibility in development of a valuation methodology.  The board deferred the application of the proposed standard on oil and gas to other types of natural resources to a technical bulletin to be developed by staff immediately following the issuance of the standard on oil and gas.  The board will continue its discussion about the requirement to report on fiduciary oil and gas activities at the next meeting.

Issue Paper for Octobert 2009 (PDF)

August 26-27, 2009 Board Meeting
A revised exposure draft (ED), Accounting for Federal Oil and Gas Resources, was issued for public comment on July 6, 2009. Comments on the proposals presented in the ED were requested by September 8, 2009. The ED in PDF format and a separate Word file presenting the specific questions raised in the ED may be retrieved by accessing the Exposure Drafts and Documents for Comment link at www.fasab.gov.

June 17-18, 2009 Board Meeting
At the June 18, 2009, meeting, all members approved a pre-ballot draft revised exposure draft (ED).  The members then approved a ballot draft submitted via email following the June meeting.  On July 6, 2009, FASAB released the revised ED, Accounting for Federal Oil and Gas Resources, for public comment.  While the proposed standards in the revised ED are similar in concept to those contained in the original ED issued on May 21, 2007, substantive changes have been made to the valuation and disclosure requirements that require re-exposure.  Comments on the proposal presented in the ED are requested by September 8, 2009.  The ED in PDF format and the specific questions for respondents in Word format are available on the FASAB website at http://www.fasab.gov/exposure.html.

Issue Paper for June 2009

April 22-23, 2009 Board Meeting
At the April 23, 2009, meeting, members voted to limit the valuation flexibility to either the proposed present value approach (using a risk-free discount rate) or a method for measuring fair value that is consistent with the Financial Accounting Standards Board Statement of Financial Accounting Standards No. 157, Fair Value Measurements.  Members reaffirmed their previous decision to transition to basic after a period of three years as required supplementary information.  Staff will incorporate board member comments into a pre-ballot draft for the June board meeting.

Issue Paper for February 2009 (PDF)

February 25-26, 2009 Board Meeting
The project was not discussed at the February board meeting.

Issue Paper for February 2009 (PDF)

December 17-18, 2008 Board Meeting
At the December meeting, the members unanimously supported continuing efforts to issue an exposure draft (ED) on accounting for federal oil and gas resources.  Based on the board members’ views expressed at the December meeting, staff will retain the scope of the ED as oil and gas only, preserve the level of detail in the draft ED except for par. 27, modify par. 27 to move away from the formula in the previously exposed ED (quantity X price X royalty rate), and keep the effective date as drafted (three year phase-in from RSI to basic with a date certain).

In addition, as time permits, staff will address the following:

  • Provide additional information on the fiduciary reporting requirement to enable the board to reach consensus on whether to retain the recognition requirements as an integral part of the fiduciary activities Schedules of Fiduciary Activity and Net Assets;
  • Provide additional information on the classification of short-term vs. long-term liabilities as it would apply to revenues to be distributed to others to enable the board to reach consensus on how to treat the oil and gas liabilities;
  • Provide additional information on the ability of DOI to provide the component entity RSI as currently proposed to enable the board to reach consensus on whether to retain the RSI requirements from the original ED;
  • Provide additional information on how to treat custodial reporting for other commodities (including other proved reserves that are not included in the estimate because they are not statutorily available for lease) to enable the board to reach consensus on how the other commodities should be addressed. Provide two or three options for reporting for other natural resources (e.g., custodial, disclosure, RSI, etc) and indicate whether the options would be in anticipation of or in lieu of another standard on natural resources.
  • Provide additional information on showing the gains and losses on the component entity statement of net cost to enable the board to reconfirm its decision to show the gains and losses on the statement of net cost of the component entity responsible for collecting royalties.
  • Provide additional information related to reporting changes in assumptions to enable the board to reach consensus on how to display the changes in long-term oil and gas assumptions.

Staff will work towards a pre-ballot re-exposure draft for the April 2009 meeting.

Issue Paper for December 2008 (PDF)

October 22-23, 2008 Board Meeting
At the October meeting, after hearing from the Department of Interior representatives regarding their experience during field testing of the May 2007 exposure draft (ED), the board members directed staff to draft a principles-based ED for their consideration.

August 20-21, 2008 Board Meeting

Representatives from the Department of Interior have been invited to the October 2008 board meeting to discuss issues raised by Interior in its comment letter on the May 2007 exposure draft and related field test questionnaires.

June 18-19, 2008 Board Meeting
At the June 19, 2008, meeting, the board directed staff to continue with the development of a final standard on oil and gas after considering a staff proposal to delay implementation of the oil and gas standard in favor of a comprehensive, principles-based standard on all natural resources.  Several of the board members indicated that they were willing to consider a less prescriptive standard that allows for more flexibility provided that staff can develop one that would meet the objectives of the standard as well as the needs of the preparers.  Staff will address the remaining issues raised in the comment letters to the May 2007 exposure draft (ED) and the Department of Interior’s fieldwork test results and present the board with a revised ED.

Issue Paper for June 2008 (PDF)

April 16-17, 2008 Board Meeting
The project was not discussed at the April meeting.  Staff expects that a detailed summary of the eight comment letters received will be provided at the June meeting.

February 13-14, 2008 Board Meeting
The Board received eight comment letters on its recent exposure draft regarding oil and gas resources. These letters are available at http://www.fasab.gov/commentletteroil.html.

At the February meeting, the Board decided that a public hearing was not necessary.

Issue Paper for February 2008 (PDF)

December 4-5, 2007 Board Meeting
Since the comment period was extended until January 11, 2008, the project was not discussed at the December Board meeting.

September 19-20, 2007 Board Meeting
Comments on the proposals presented in the May 2007 ED were requested by September 21, 2007.  However, because the Board received a request for the comment period to be extended and because few responses have been received, the Board agreed to extend the comment period until January 11, 2008.

July 25-26, 2007
Since the ED was released for public comment in May, the project was not discussed at the July 2007 Board meeting.

May 23-24, 2007
An exposure draft entitled Accounting for Federal Oil and Gas Resources ED was issued for public comment on May 21, 2007.  Comments on the proposals presented in the ED are requested by September 21, 2007.  The ED in PDF format and a separate Word file presenting the specific questions raised in the ED may be retrieved by accessing the Exposure Drafts and Documents for Comment link at www.fasab.gov.

Accounting for Federal Oil and Gas Resources ED (PDF)

March 21-22, 2007
A ballot draft exposure draft (ED) is currently being voted on by members. Staff believes the ED will be issued for public comment in mid to late-May. The Board expects to endorse field testing of the proposal (including the alternative methodology proposed by one member).

January 17-18, 2007
The Board is continuing to make revisions to the exposure draft (ED) entitled Accounting for Federal Oil and Gas Resources. Major changes made to the ED since the November 2006 Board meeting include:

  1. The text of the ED was revised to establish a liability in conjunction with the recognition of the asset estimated petroleum royalties and revenue collections designated to be distributed to others, e.g., the states, the general fund of the U.S. Treasury, and other federal agencies.   In addition, the pro-forma transactions and financial statements were also revised to address the liability
  2. The transmittal letter in the ED, the question pertaining to an alternative view and the Executive Summary were revised to call attention to the alternative view and to provide references to it in each of these three sections.
  3. Question number 3 was revised to ask how disclosure information and RSI would be used and the Basis for Conclusions was expanded to support the question.

The Board members were in general agreement with the changes that were made and approved staff’s request to circulate a pre-ballot before the March 2007 Board meeting.

Transmittal Letter for January 2007 revised Accounting for Federal Oil and Gas Resources ED (PDF)

November 15 – 16, 2006
The Board is continuing to make revisions to the exposure draft (ED) entitled Accounting for Federal Oil and Gas Resources. Major changes made to the ED since the July meeting when this project was last discussed include:

  1. The value of estimated petroleum royalties from natural gas plant liquids (NGPLs) are now proposed to be calculated separately from those from oil and lease condensate.
  2. The pro forma transactions, the pro forma financial statements, and the pro forma disclosure and RSI presentations were revised due to the decision to identify and calculate the value of estimated petroleum royalties separately for NGPLs.
  3. A clarification was made to use the “dry” gas price when calculating the value of estimated petroleum royalties for gas.

The Board tentatively agreed that a liability exists and should be recognized for the estimated petroleum royalties which the government is obligated in accordance with authoritative laws and regulations to distribute to others. The revised draft ED will be discussed at the January 2007 Board meeting.

September 27-28, 2006
The project was not discussed at the September Board meeting.

July 26-27, 2006
The Board is continuing to make revisions to the exposure draft (ED) entitled Accounting for Federal Oil and Gas Resources. Significant changes made to the ED since the May meeting include:

  1. The addition of an alternative view from the CBO regarding fair value and recognition of unproved reserves;
  2. The addition of disclosure requirements showing the factors that produce the asset value for each reported period;
  3. The movement of the sales volume and sales value information to RSI from disclosure; and
  4. The addition of two questions in the Request for Comments section of the ED – one pertaining to fiduciary activities and the other regarding disclosures for the consolidated financial report (CFR).

During the July meeting, the Board agreed on the following:

  1. The method of valuing natural gas liquid (NGL) proved reserves;
  2. The price to be used to value gas;
  3. A clarification of the term “deterministic”, which is a term used to measure and report single best estimate of recovering oil and gas reserves; and,
  4. A pre-ballot ED could be circulated by staff.

Based on these decisions by the Board members, staff will make the appropriate revisions to the ED and circulate a pre-ballot ED to the Board members before the September Board meeting. The tentative plan is to formally ballot the ED at the September Board meeting to issue the ED for public comment.

May 24-25, 2006
The Board discussed an issue paper on royalty free production of oil and gas, a revised draft exposure draft (ED), entitled Accounting for Federal Oil and Gas Resources, and a suggestion by FASAB staff to study coal in the next phase of the natural resources project.

Certain Federal oil and gas leases authorize oil and gas operators to produce oil and gas during the year without having to pay royalty up to a certain production quantity or market price threshold. During discussions on the royalty free production issue paper, Board members agreed that a requirement would be added in the ED to report the annual estimated value for royalty relief as required supplementary information. In addition, they agreed that a question should be added to the Request for Comments section of the ED pertaining to this requirement.

In regard to discussions on the revised draft ED, Board members suggested additional minor changes and agreed that a pre-ballot could be circulated by staff. Therefore, a pre-ballot will be circulated before the July Board meeting and, if feasible based on member comments, a ballot on the ED will be provided in material for the July meeting.

Although, FASAB staff had suggested studying coal in the next phase of the natural resources project, it was suggested by one Board member that, instead of focusing strictly on coal, staff look at a group of mining minerals. The objective would be to see if it is possible to come up with a standard which has similar principles for a group of mining minerals. Board members agreed with this suggestion and staff will begin the next phase of the natural resources project studying a group of mining minerals.

Issue Paper for May 2006 (PDF)

March 29-30, 2006
The Board discussed a revised draft exposure draft (ED), entitled Accounting for Federal Oil and Gas Resources. In the ED transmittal letter to the Board, staff had indicated that during the Board meeting it would like to get members’ thoughts on royalty free production of oil and gas in the Gulf of Mexico . The proposed accounting standards for oil and gas resources would not result in separate recognition or disclosure of this royalty free production. Therefore, before discussions on the ED began, staff explained that, while it had not yet thoroughly researched and considered the issue of royalty relief, there were various options for addressing the issue. Staff provided a summary of the different options. After a brief discussion, the Board members agreed that more factual information on the royalty relief program is needed for discussion and asked staff to research the issue.

During discussions on the draft ED, Board members agreed that for the next meeting staff should do the following:

  1. Review the definitions presented in the text of the proposed standards for possible relocation to the glossary.
  2. Prepare questions for respondents for incorporation in the ED that address:
    1. the level of information requested to be disclosed in the footnotes or displayed as RSI;
    2. the challenges posed by the use of the present (or discounted cash) value measurement attribute for measuring the value of the Federal government’s estimated petroleum royalties; and,
    3. the use of reserves classified as proved, probable, and possible to calculate the value of the Federal government’s estimated petroleum royalties for capitalization on the balance sheet, instead of using only the proved reserves as proposed in the ED
  3. Revise the paragraphs in the ED that address the “Rights to Future Royalty Stream Identified for Sale ” to clarify how they should be accounted for and reported.

January 11-12, 2006
The Board discussed a draft exposure draft (ED), entitled Accounting for Federal Oil and Gas Resources. Before discussions on the ED began, staff described the proposed calculation in the proposed standards for valuing the Federal government’s royalty share of proved oil and gas reserves, referred to as “estimated petroleum royalties”. Staff explained that instead of using national level information to calculate the estimated petroleum royalties, staff proposed using estimated quantity, price, and royalty rate information on a regional basis. The values of estimated petroleum royalties calculated on a regional basis would be added together to provide a national value of estimated petroleum royalties for reporting on the balance sheet. In addition, staff explained it had addressed future royalty rights held for sale in the proposed standards.

During discussions on the draft ED, Board members provided many suggestions for improving the ED but otherwise gave tentative approval of the proposals. Staff will make the changes suggested by the Board members and develop a pre-ballot ED.

October 5-6, 2005
Board members discussed the staff proposed formula for valuing the estimated value of the Federal government’s royalty share for proved oil and gas reserves on lands under the control of the Federal government, referred to as “estimated petroleum royalties.” The value of estimated petroleum royalties would be calculated by multiplying the estimated aggregated quantity of proved oil and gas reserves by the national average well head price for natural gas, or the national average first purchase price for oil, times the national average royalty rate.

One Board member commented that a regional average price and regional average royalty rate were available and would provide better information. He indicated that it was too early just to move to the national averages. The Board member said the standards should have some requirement to account for royalty streams that were sold below value; and, to have some idea of whether the nation was better off or worse off with the transaction.

Board members agreed with the staff proposed formula for valuing the Federal government’s estimated petroleum royalties. In addition, the Board members agreed to add a requirement in the proposed standards to address the accounting for royalty streams identified for sale.

Staff will develop a draft Exposure Draft (ED) for the January 2006 meeting. Staff will also analyze the factors that would go into valuing a royalty stream identified for sale and propose a concept to revalue a royalty stream identified for sale for incorporation in the oil and gas resources accounting standards.

Issue Paper for October 2005 (PDF)

August 17-18, 2005
A representative from the Energy Information Administration (EIA) and a representative from the Department of the Interior (DOI) participated in the August 2005 Board meeting. Each participant gave introductory remarks, including what each thought the objective of the oil and gas project was, followed by discussions on questions the Board had identified in previous meetings. The participants recommended that the calculation for valuing the royalty interest the Federal government has in the proved reserves under its control be straightforward and manageable. Based on the discussions, staff will begin developing an Exposure Draft.

Issue Paper for August 2005 (PDF)

June 22-23, 2005
Representatives from the Department of Interior and the Energy Information Administration will be present at the August 2005 Board meeting to discuss issues raised by the Board related to proved oil and gas reserves issues.

May 4-5, 2005
Representatives from the Department of Interior and the Energy Information Administration will be present at the June 2005 Board meeting to discuss issues raised by the Board related to proved oil and gas reserves issues.

March 2-3, 2005 Meeting:
At the March 2005 Board meeting, staff provided responses to a large number of issues raised by the Board at the December 2004 meeting. Responses to those issues were presented in the form of a Basis for Conclusions (BfC). The Board raised additional questions for staff follow-up. These included questions regarding the availability of information sufficient to support a net present value measure and detailed well-head prices to replace average well-head prices. Staff will continue developing the BfC with information that responds to the questions from Board members. Information pertaining to these questions can be found in the March Board meeting minutes when approved.

Issue Paper for March 2005 (PDF)

December 15-16, 2004 Meeting:
At the December 2004 Board meeting, staff provided responses to a large number of issues raised by the Board at the August meeting. Responses to those issues were presented in the form of a Basis for Conclusions (BfC). The Board raised additional questions and asked staff to research them. Staff will continue developing the BfC with information that responds to the questions from Board members.

Issue Paper 12/15-16/2004 (PDF)

Minutes: FASAB Meeting Minutes, December 2004 (PDF)

October 20-21, 2004 Meeting:
This project was not discussed at the October Board meeting.

August 25-26, 2004 Meeting:
At the August Board meeting, FASAB staff provided a preliminary exposure draft (ED) on reporting for oil and gas resources to the Board members. The objectives of the meeting were to get general approval from Board members on the proposals contained in the ED and to get feedback and suggestions from them in regard to all areas of the ED. The major proposal was to capitalize the estimated cash inflow from royalties based on the estimated quantity of proved oil and gas reserves from lands under Federal jurisdiction. Staff received a considerable number of comments from the Board. Staff will continue developing the ED based on the comments received from Board members.

Minutes: FASAB Meeting Minutes, August 2004 (PDF)

Deliberations prior to August 2004

The project initially began with the formation of a task force to conduct research. The task force produced a research report in June 2000 entitled Accounting for the Natural Resources of the Federal Government . (See http://www.fasab.gov/reports.htm to access the report.) In 2002, the Board resumed active consideration of the issues raised by the task force after a deferral to address other issues.

The Board decided to proceed with developing standards for oil and gas first due to the extensive literature available in other domains. The oil and gas project framework would be used in subsequent phases for the remaining types of natural resources (e.g., coal, timber, hard rock minerals). During 2003 and in earlier meetings in 2004, the concept of capitalizing the “production stage” anticipated revenue stream flowing to the Federal government (from royalty collections) was pursued, along with the development of various disclosures. However, the Board learned that the Energy Information Administration (EIA), Department of Energy, was to begin distinguishing between the quantity of the proved reserves from lands under Federal jurisdiction and the quantity of proved reserves from other lands in its reports. The EIA defines proved reserves as those volumes of oil and gas resources that geological and engineering data demonstrate with reasonable certainty to be recoverable (extracted and produced) in future years from known reservoirs under existing economic and operating conditions. As a result, the

Board is researching the concept of capitalizing the estimated cash inflow from royalties based on the estimated quantity of proved oil and gas reserves from lands under Federal jurisdiction with various supporting disclosures.

Minutes