# ASC 360-932-35: Property, Plant, and Equipment — Extractive Activities—Oil and Gas — 35 Subsequent Measurement Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/360/932/#35-subsequent-measurement) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T00:09:03.187Z to 2026-09-10T00:09:03.187Z Record version: sha256:5b7de9e67bb00f38b350f57aef01a84bbcc61ab8a4a3ab5d32a0691b22b6e052 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 360-932-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/360/932/#35-subsequent-measurement) SEC content: no #### Successful Efforts ##### [360-932-35-1](https://asc.understandingaccounting.org/asc/360/932/#360-932-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:03.187Z to 2026-09-10T00:09:03.187Z Record version: sha256:718d05b1833fbfc9ea587a7b832566189d3c46c63556e4aa07e1a7ba0a9fcbfe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following guidance addresses successful efforts accounting. The Securities and Exchange Commission (SEC) literature addresses full cost accounting issues. ##### [360-932-35-2](https://asc.understandingaccounting.org/asc/360/932/#360-932-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:03.187Z to 2026-09-10T00:09:03.187Z Record version: sha256:2845c66a43a81b074a22ead26d045293d8bd07ab0357db42e680016da31ff720 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Section deals with disposition of the costs of assets (see paragraphs [932-360-25-5 through 25-14](https://asc.understandingaccounting.org/asc/360/932/#360-932-25-5) and [932-360-25-16 through 25-17](https://asc.understandingaccounting.org/asc/360/932/#360-932-25-16) ) after capitalization. Among other things, those paragraphs provide that the acquisition costs of [proved properties](https://asc.understandingaccounting.org/glossary/p/#proved-properties "Proved properties are properties with proved reserves.") and the costs of [wells and related equipment and facilities](https://asc.understandingaccounting.org/glossary/w/#wells-and-related-equipment-and-facilities "Wells and related equipment and facilities are often referred to in the oil and gas industry as lease and well equipment even though, technically, the property may have been acquired other than by a lease. The costs include those incurred to: Drill and equip those exploratory wells and exploratory-type stratigraphic test wells that have found proved reserves Obtain access to proved reserves and provide facilities for extracting, treating, gathering, and storing the oil and gas, including the drilling and equipping of development wells and development-type stratigraphic test wells (whether those wells are successful or unsuccessful) and service wells.") shall be amortized (see paragraphs [932-360-35-3 through 35-7](https://asc.understandingaccounting.org/asc/360/932/#360-932-35-3) ) to become part of the cost of oil and gas produced; that impairment (see paragraphs [932-360-35-11](https://asc.understandingaccounting.org/asc/360/932/#360-932-35-11) and [932-360-35-16 through 35-18](https://asc.understandingaccounting.org/asc/360/932/#360-932-35-16) ) of [unproved properties](https://asc.understandingaccounting.org/glossary/u/#unproved-properties "Unproved properties are properties with no proved reserves.") shall be recognized; and that unproved [properties](https://asc.understandingaccounting.org/glossary/p/#properties "Mineral interests in properties (hereinafter referred to as properties), which include all of the following: Fee ownership or a lease Concession Other interest representing the legal right to produce or a revenue interest in the production of oil or gas subject to such terms as may be imposed by the conveyance of that interest. Properties also include: Royalty interests Production payments payable in oil or gas Other nonoperating interests in properties operated by others. Properties include those agreements with foreign governments or authorities under which an entity participates in the operation of the related properties or otherwise serves as producer of the underlying reserves (see paragraph 932-235-50-7); but properties do not include other supply agreements or contracts that represent the right to purchase (as opposed to extract) oil and gas. Properties are classified as proved properties or unproved properties.") shall be reclassified to proved (see paragraph [932-360-35-15](https://asc.understandingaccounting.org/asc/360/932/#360-932-35-15)) or expensed (see Section 932-360-40) subject to sufficient progress (see paragraph [932-360-35-18](https://asc.understandingaccounting.org/asc/360/932/#360-932-35-18)) being made toward proving the reserves. ##### [360-932-35-3](https://asc.understandingaccounting.org/asc/360/932/#360-932-35-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:03.187Z to 2026-09-10T00:09:03.187Z Record version: sha256:254436bbd63cec07d2556c853a0de25fcef6d3bbb59db236457d0eed71f89627 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The costs of an entity's wells and related equipment and facilities and the costs of the related proved properties shall be amortized as the related oil and gas reserves are produced. That amortization plus [production](https://asc.understandingaccounting.org/glossary/p/#production "Production involves lifting the crude oil and natural gas to the surface, extracting saleable hydrocarbons, in the solid, liquid, or gaseous state from oil sands, shale, coalbeds, or other nonrenewable natural resources that are intended to be upgraded into synthetic oil or gas, gathering, treating, field processing (as in the case of processing gas to extract liquid hydrocarbons), and field storage. The oil and gas production function shall be regarded as ending at a terminal point, which is the outlet valve on the lease or field storage tank. If unusual physical or operational circumstances exist, it may be appropriate to regard the terminal point for the production function as: The first point at which oil, gas, or gas liquids, natural or synthetic, are delivered to a main pipeline, a common carrier, a refinery, or a marine terminal In the case of natural resources that are intended to be upgraded into synthetic oil or gas, if those natural resources are delivered to a purchaser before upgrading, the first point at which the natural resources are delivered to a main pipeline, a common carrier, a refinery, a marine terminal, or a facility that upgrades such natural resources into synthetic oil or gas.") (lifting) costs become part of the cost of oil and gas produced. Estimated residual salvage values shall be taken into account in determining amortization and depreciation rates. ##### [360-932-35-4](https://asc.understandingaccounting.org/asc/360/932/#360-932-35-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:03.187Z to 2026-09-10T00:09:03.187Z Record version: sha256:a2ec310d9d4258ff45eaa0aef68623bdb7c36ffe24727aa128d0719755e59bde Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Depreciation of [support equipment and facilities](https://asc.understandingaccounting.org/glossary/s/#support-equipment-and-facilities "Support equipment and facilities used in oil- and gas-producing activities, such as seismic equipment, drilling equipment, construction and grading equipment, vehicles, repair shops, warehouses, supply points, camps, and division, district, or field offices.") used in oil- and gas-producing activities shall be accounted for as [exploration](https://asc.understandingaccounting.org/glossary/e/#exploration "Exploration involves both of the following: Identifying areas that may warrant examination Examining specific areas that are considered to have prospects of containing oil and gas reserves, including drilling exploratory wells and exploratory-type stratigraphic test wells.") cost, development cost, or production cost, as appropriate (see paragraph [932-360-25-16](https://asc.understandingaccounting.org/asc/360/932/#360-932-25-16)). ##### [360-932-35-5](https://asc.understandingaccounting.org/asc/360/932/#360-932-35-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:03.187Z to 2026-09-10T00:09:03.187Z Record version: sha256:86795ca667334d12acf58bfe1cf3356651a96bb2c734ecba8b80680f9bceb765 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The unit-of-production method of amortization requires that the total number of units of oil or gas reserves in a property or group of properties be estimated and that the number of units produced in the current period be determined. Many properties contain both oil and gas reserves. In those cases, the oil and gas reserves and the oil and gas produced shall be converted to a common unit of measure on the basis of their approximate relative energy content (without considering their relative sales values). However, if the relative proportion of gas and oil extracted in the current period is expected to continue throughout the remaining productive life of the property, unit-of-production amortization may be computed on the basis of one of the two minerals only; similarly, if either oil or gas clearly dominates both the reserves and the current production (with dominance determined on the basis of relative energy content), unit-of-production amortization may be computed on the basis of the dominant mineral only. ##### [360-932-35-6](https://asc.understandingaccounting.org/asc/360/932/#360-932-35-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:03.187Z to 2026-09-10T00:09:03.187Z Record version: sha256:49665d1409e9fe8ee3c53fc4c3d1ed8e5474a1b3fd6a7980b069942fa4b135ee Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Capitalized acquisition costs of proved properties shall be amortized (depleted) by the unit-of-production method so that each unit produced is assigned a pro rata portion of the unamortized acquisition costs. Under the unit-of-production method, amortization (depletion) may be computed either on a property-by-property basis or on the basis of some reasonable aggregation of properties with a common geological structural feature or stratigraphic condition, such as a [reservoir](https://asc.understandingaccounting.org/glossary/r/#reservoir "A reservoir is a porous and permeable underground formation containing a natural accumulation of producible oil or gas that is confined by impermeable rock or water barriers and is individual and separate from other reservoirs.") or [field](https://asc.understandingaccounting.org/glossary/f/#field "A field is an area consisting of a single reservoir or multiple reservoirs all grouped on or related to the same individual geological structural feature and/or stratigraphic condition. There may be two or more reservoirs in a field which are separated vertically by intervening impervious strata, or laterally by local geologic barriers, or by both. Reservoirs that are associated by being in overlapping or adjacent fields may be treated as a single or common operational field. The geological terms structural feature and stratigraphic condition are intended to identify localized geological features as opposed to the broader terms of basins, trends, provinces, plays, areas-of-interest, and so forth."). When an entity has a relatively large number of royalty interests whose acquisition costs are not individually significant, they may be aggregated, for the purpose of computing amortization, without regard to commonality of geological structural features or stratigraphic conditions; if information is not available to estimate reserve quantities applicable to royalty interests owned (see paragraph [932-235-50-4](https://asc.understandingaccounting.org/asc/235/932/#235-932-50-4)), a method other than the unit-of-production method may be used to amortize their acquisition costs. The unit cost shall be computed on the basis of the total estimated units of [proved oil and gas reserves](https://asc.understandingaccounting.org/glossary/p/#proved-oil-and-gas-reserves "Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulation before the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether the estimate is a deterministic estimate or probabilistic estimate. The project to extract the hydrocarbons must have commenced, or the operator must be reasonably certain that it will commence the project, within a reasonable time.The area of the reservoir considered as proved includes all of the following: The area identified by drilling and limited by fluid contacts, if any Adjacent undrilled portions of the reservoir that can, with reasonable certainty, be judged to be continuous with it and to contain economically producible oil or gas on the basis of available geoscience and engineering data. In the absence of data on fluid contacts, proved quantities in a reservoir are limited by the lowest known hydrocarbons as seen in a well penetration unless geoscience, engineering, or performance data and reliable technology establish a lower contact with reasonable certainty.Where direct observation from well penetrations has defined a highest known oil elevation and the potential exists for an associated gas cap, proved oil reserves may be assigned in the structurally higher portions of the reservoir only if geoscience, engineering, or performance data and reliable technology establish the higher contact with reasonable certainty.Reserves that can be produced economically through application of improved recovery techniques (including, but not limited to, fluid injection) are included in the proved classification when both of the following occur: Successful testing by a pilot project in an area of the reservoir with properties no more favorable than in the reservoir as a whole, the operation of an installed program in the reservoir or an analogous reservoir, or other evidence using reliable technology establishes the reasonable certainty of the engineering analysis on which the project or program was based. The project has been approved for development by all necessary parties and entities, including governmental entities. Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price shall be the average price during the 12-month period before the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions."). (Joint production of both oil and gas is discussed in the preceding paragraph.) Unit-of-production amortization rates shall be revised whenever there is an indication of the need for revision but at least once a year; those revisions shall be accounted for prospectively as changes in accounting estimates (see paragraphs [250-10-45-17 through 45-20](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-17) ). ##### [360-932-35-7](https://asc.understandingaccounting.org/asc/360/932/#360-932-35-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:03.187Z to 2026-09-10T00:09:03.187Z Record version: sha256:0e4c23d70cf977dba90fa7611e2917c845d6bc185cce6b1c2bbe87e1875e9a89 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Capitalized costs of exploratory wells and exploratory-type stratigraphic test wells that have found proved reserves and capitalized development costs shall be amortized (depreciated) by the unit-of-production method so that each unit produced is assigned a pro rata portion of the unamortized costs. It may be more appropriate, in some cases, to depreciate natural gas cycling and processing plants by a method other than the unit-of-production method. Under the unit-of-production method, amortization (depreciation) may be computed either on a property-by-property basis or on the basis of some reasonable aggregation of properties with a common geological structural feature or stratigraphic condition, such as a reservoir or field. The unit cost shall be computed on the basis of the total estimated units of proved developed reserves, rather than on the basis of all proved reserves, which is the basis for amortizing acquisition costs of proved properties. If significant development costs (such as the cost of an off-shore production platform) are incurred in connection with a planned group of development wells before all of the planned wells have been drilled, it shall be necessary to exclude a portion of those development costs in determining the unit-of-production amortization rate until the additional development wells are drilled. Similarly it shall be necessary to exclude, in computing the amortization rate, those proved developed reserves that will be produced only after significant additional development costs are incurred, such as for improved recovery systems. However, in no case shall future development costs be anticipated in computing the amortization rate. (Joint production of both oil and gas is discussed in paragraph [932-360-35-5](https://asc.understandingaccounting.org/asc/360/932/#360-932-35-5).) Unit-of-production amortization rates shall be revised whenever there is an indication of the need for revision but at least once a year; those revisions shall be accounted for prospectively as changes in accounting estimates (see paragraphs [250-10-45-17 through 45-20](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-17) ). ##### [360-932-35-8](https://asc.understandingaccounting.org/asc/360/932/#360-932-35-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:03.187Z to 2026-09-10T00:09:03.187Z Record version: sha256:71c04ade4383b5fd890955f4938caf07ddadce0fac8fbf8b120b0e29ada92215 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Typically the evaluation of oil and gas producing properties is on a field-by-field basis or by logical grouping of assets if there is a significant shared infrastructure (for example, platform). The undiscounted future cash flows shall be based on total proved and risk-adjusted probable and possible reserves. That assessment shall be based on the carrying amount of the asset (asset group) at the date it is tested for recoverability. The impairment loss shall be measured as the amount by which the carrying amount of a long-lived asset (asset group) exceeds its fair value. ##### [360-932-35-9](https://asc.understandingaccounting.org/asc/360/932/#360-932-35-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:03.187Z to 2026-09-10T00:09:03.187Z Record version: sha256:bd797e41db3c52f2b3e78de1cfdba1d4a3cce5acb0cd4fd8812cb834ca732383 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following paragraphs provide guidance specific to the oil and gas industry on asset impairment. However the general rules (see the [Impairment or Disposal of Long-Lived Assets Subsection](https://asc.understandingaccounting.org/asc/360/10/#15-scope-and-scope-exceptions) of Section 360-10-15 and the [Impairment or Disposal of Long-Lived Assets Subsection](https://asc.understandingaccounting.org/asc/360/10/#35-subsequent-measurement) of Section 360-10-35) for asset impairment shall also be followed. ##### [360-932-35-10](https://asc.understandingaccounting.org/asc/360/932/#360-932-35-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:03.187Z to 2026-09-10T00:09:03.187Z Record version: sha256:8fed4dd0b2c4698797d870e8ad79a72e6823a4873648c189e61121d5dc77c135 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraphs [360-10-35-15 through 35-49](https://asc.understandingaccounting.org/asc/360/10/#360-10-35-15) for impairment standards applicable to the costs of an entity's wells and related equipment and facilities and the costs of the related proved properties. ##### [360-932-35-11](https://asc.understandingaccounting.org/asc/360/932/#360-932-35-11) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:03.187Z to 2026-09-10T00:09:03.187Z Record version: sha256:affddba15787882bb70ff2233ca3843793cb68ccc27e8879c56bbcb863d631bf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Unproved properties shall be assessed periodically to determine whether they have been impaired. A property would likely be impaired, for example, if a dry hole has been drilled on it and the entity has no firm plans to continue drilling. Also, the likelihood of partial or total impairment of a property increases as the expiration of the lease term approaches if drilling activity has not commenced on the property or on nearby properties. If the results of the assessment indicate impairment, a loss shall be recognized by providing a valuation allowance. Impairment of individual unproved properties whose acquisition costs are relatively significant shall be assessed on a property-by-property basis, and an indicated loss shall be recognized by providing a valuation allowance. When an entity has a relatively large number of unproved properties whose acquisition costs are not individually significant, it may not be practical to assess impairment on a property-by-property basis, in which case the amount of loss to be recognized and the amount of the valuation allowance needed to provide for impairment of those properties shall be determined by amortizing those properties, either in the aggregate or by groups, on the basis of the experience of the entity in similar situations and other information about such factors as the primary lease terms of those properties, the average holding period of unproved properties, and the relative proportion of such properties on which proved reserves have been found in the past. ##### [360-932-35-12](https://asc.understandingaccounting.org/asc/360/932/#360-932-35-12) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:03.187Z to 2026-09-10T00:09:03.187Z Record version: sha256:a71fc984e3086944419477cb1f021248c15427ce2c3d6860a9cee30d2595888e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The impairment provisions relating to unproved properties referred to in paragraphs [932-360-35-11](https://asc.understandingaccounting.org/asc/360/932/#360-932-35-11), [932-360-35-19](https://asc.understandingaccounting.org/asc/360/932/#360-932-35-19), [932-360-40-1 through 40-2](https://asc.understandingaccounting.org/asc/360/932/#360-932-40-1) , and [932-360-55-8 through 55-9](https://asc.understandingaccounting.org/asc/360/932/#360-932-55-8) remain applicable to unproved properties. ##### [360-932-35-13](https://asc.understandingaccounting.org/asc/360/932/#360-932-35-13) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:03.187Z to 2026-09-10T00:09:03.187Z Record version: sha256:d957dbebb6ce0fd4ff6a1a913e390965c662fee15b3d8b415fe2c691d8d3379e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the sufficient progress criteria (see paragraphs [932-360-35-18 through 35-20](https://asc.understandingaccounting.org/asc/360/932/#360-932-35-18) )is not met, or if an entity obtains information that raises substantial doubt about the economic or operational viability of the project, the [exploratory well](https://asc.understandingaccounting.org/glossary/e/#exploratory-well "An exploratory well is a well drilled to find a new field or to find a new reservoir in a field previously found to be productive of oil or gas in another reservoir. Generally, an exploratory well is any well that is not a development well, a service well , or a stratigraphic test well.") or exploratory-type stratigraphic well shall be assumed to be impaired and its costs, net of any salvage value, shall be charged to expense. Further, an entity shall not continue to capitalize exploratory well costs on the chance that either of the following might occur: 1. a Current market conditions will change (for example, an increase in the market price of oil or gas). 2. b Technology will be developed to make the development of the project economically and operationally viable. ##### [360-932-35-14](https://asc.understandingaccounting.org/asc/360/932/#360-932-35-14) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:03.187Z to 2026-09-10T00:09:03.187Z Record version: sha256:9a3aeb58f55eb104ee870598cfe8a24a4a1cbc4258af19b22d9b7f5fdbf7651a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An illustration of specialized equipment impairment can be seen in Example 12 (see paragraphs [360-10-55-50 through 55-54](https://asc.understandingaccounting.org/asc/360/10/#360-10-55-50) ). ##### [360-932-35-15](https://asc.understandingaccounting.org/asc/360/932/#360-932-35-15) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:03.187Z to 2026-09-10T00:09:03.187Z Record version: sha256:8b1003b79fbf383b79a525f8c308333343a0a583dd561f78e54967d8f9c9fc8f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A property shall be reclassified from unproved properties to proved properties when proved reserves are discovered on or otherwise attributed to the property; occasionally, a single property, such as a foreign lease or concession, covers so vast an area that only the portion of the property to which the proved reserves relate—determined on the basis of geological structural features or stratigraphic conditions—shall be reclassified from unproved to proved. For a property whose impairment has been assessed individually in accordance with paragraph [932-360-35-11](https://asc.understandingaccounting.org/asc/360/932/#360-932-35-11), the net carrying amount (acquisition cost minus valuation allowance) shall be reclassified to proved properties; for properties amortized by providing a valuation allowance on a group basis, the gross acquisition cost shall be reclassified. ##### [360-932-35-16](https://asc.understandingaccounting.org/asc/360/932/#360-932-35-16) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:03.187Z to 2026-09-10T00:09:03.187Z Record version: sha256:3722878a312d62a93b258ca90dc4ff68277d976625e3390a6594e3ed87f33103 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As specified in paragraph [932-360-25-10](https://asc.understandingaccounting.org/asc/360/932/#360-932-25-10), the costs of drilling an exploratory well or an exploratory-type stratigraphic well shall be capitalized as part of the entity's [uncompleted wells, equipment, and facilities](https://asc.understandingaccounting.org/glossary/u/#uncompleted-wells-equipment-and-facilities "Uncompleted wells, equipment, and facilities, the costs of which include those incurred to: Drill and equip wells that are not yet completed Acquire or construct equipment and facilities that are not yet completed and installed.") pending the determination of whether the well has found proved reserves. ##### [360-932-35-17](https://asc.understandingaccounting.org/asc/360/932/#360-932-35-17) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:03.187Z to 2026-09-10T00:09:03.187Z Record version: sha256:11022fdb8c6f6e6522ff75efc84e76155920d9705106487ae17075c5f891ab4d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If proved reserves are found, the capitalized costs of drilling the well shall be reclassified as part of the costs of the entity's wells and related equipment and facilities at that time (even though the well may not be completed as a producing well). If proved reserves are not found, the capitalized costs of drilling the well shall be charged to expense. ##### [360-932-35-18](https://asc.understandingaccounting.org/asc/360/932/#360-932-35-18) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:03.187Z to 2026-09-10T00:09:03.187Z Record version: sha256:687069d0f3695ec8f657640a4f9113deee3aea1de5bcf9545c318e6de534d912 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An exploratory well or an exploratory-type stratigraphic well may be determined to have found oil and gas reserves, but those reserves cannot be classified as proved when drilling is completed. In those cases, the capitalized drilling costs shall continue to be capitalized if the well has found a sufficient quantity of reserves to justify its completion as a producing well and the entity is making sufficient progress assessing the reserves and the economic and operating viability of the project. Note that an entity is not required to complete the exploratory or exploratory-type stratigraphic well as a producing well. For purposes of determining whether capitalized drilling costs shall continue to be capitalized pending the determination of proved reserves, a project may include more than one exploratory well or exploratory-type stratigraphic well if the reserves are intended to be extracted in a single, integrated producing operation (for example, the producing wells will operate with shared infrastructure). ##### [360-932-35-19](https://asc.understandingaccounting.org/asc/360/932/#360-932-35-19) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:03.187Z to 2026-09-10T00:09:03.187Z Record version: sha256:d91879138fe01932285d170f0a50a814c17b5a83a82d6fabcc8efb94e6f39d8e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All relevant facts and circumstances shall be evaluated when determining whether an entity is making sufficient progress on assessing the reserves and the economic and operating viability of the project. The following are some indicators, among others, that an entity is making sufficient progress (see the following paragraph). No single indicator is determinative. An entity shall evaluate indicators in conjunction with all other relevant facts and circumstances. These indicators include: 1. a Commitment of project personnel who are at the appropriate levels and who have the appropriate skills 2. b Costs that are being incurred to assess the reserves and their potential development 3. c An assessment process covering the economic, legal, political, and environmental aspects of the potential development is in progress 4. d Existence (or active negotiations) of sales contracts with customers for the oil and gas 5. e Existence (or active negotiations) of agreements with governments, lenders, and venture partners 6. f Outstanding requests for proposals for development of any required facilities 7. g Existence of firm plans, established timetables, or contractual commitments, which may include seismic testing and drilling of additional exploratory wells 8. h Progress that is being made on contractual arrangements that will permit future development 9. i Identification of existing transportation and other infrastructure that is or will be available for the project (subject to negotiations for use). Long delays in the assessment or development plan (whether anticipated or unexpected) may raise doubts about whether the entity is making sufficient progress to continue the capitalization of exploratory well or exploratory-type stratigraphic well costs after the completion of drilling. The longer the assessment process for the reserves and the project, the more difficult it is to conclude that the entity is making sufficient progress to continue the capitalization of those exploratory well or exploratory-type stratigraphic well costs. ##### [360-932-35-20](https://asc.understandingaccounting.org/asc/360/932/#360-932-35-20) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:03.187Z to 2026-09-10T00:09:03.187Z Record version: sha256:75615b28d65571ec5f01093dc0e50d01615e58911bff2986cd6421beaf742e10 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an entity has not engaged in substantial activities to assess the reserves or the development of the project in a reasonable period of time after the drilling of the well is completed or activities have been suspended, any capitalized costs associated with that well shall be expensed net of any salvage value. After a reasonable period of time, the planning of future activities without engaging in substantial activities shall not be sufficient to continue the capitalization of exploratory well or exploratory-type stratigraphic well costs. However, brief interruptions in activities required to assess the reserves or the project, or other delays resulting from governmental or other third-party evaluation of a proposed project, do not require capitalized exploratory well or exploratory-type stratigraphic well costs to be expensed. ##### [360-932-35-21](https://asc.understandingaccounting.org/asc/360/932/#360-932-35-21) Pending content: no Source downloaded (UTC): 2026-09-10T00:09:03.187Z to 2026-09-10T00:09:03.187Z Record version: sha256:19aec2f0e32c408aa81f444d66994ee9c69735603e779465df5f7ed544a77934 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Information that becomes available after the end of the period covered by the financial statements but before those financial statements are issued or are available to be issued (as discussed in Section 855-10-25) shall be taken into account in evaluating conditions that existed at the balance sheet date, for example, in assessing unproved properties (see paragraph [932-360-35-11](https://asc.understandingaccounting.org/asc/360/932/#360-932-35-11)) and in determining whether an exploratory well or exploratory-type [stratigraphic test well](https://asc.understandingaccounting.org/glossary/s/#stratigraphic-test-well "A stratigraphic test is a drilling effort, geologically directed, to obtain information pertaining to a specific geologic condition. Such wells customarily are drilled without the intention of being completed for hydrocarbon production. This classification also includes tests identified as core tests and all types of expendable holes related to hydrocarbon exploration. Stratigraphic tests are classified as exploratory-type if not drilled in a proved area or development-type if drilled in a proved area.") had found proved reserves (see paragraphs [932-360-35-18 through 35-20](https://asc.understandingaccounting.org/asc/360/932/#360-932-35-18) ).