Exploration may be carried out either prior to or after mineral leases are acquired. In most cases, if exploration is to be conducted before a lease is obtained, an exploration permit, commonly called shooting rights, must be obtained from the property owner. If offshore exploration is involved, a permit that does not usually require the payment of a fee must be obtained, normally from the U.S. Department of Interiors Minerals Management Service (MMS) now ONRR. In either offshore or onshore activities, permission is required to conduct exploration.
Onshore exploration rights may take one of two forms. Under a shooting rights only contract, the rights holder is allowed to enter onto the property and conduct exploratory activities, up to but not including the drilling of an exploratory well.
The entry to record would be similar to the entry below:
Work in Progress -- Shooting rights & damages 2,300
Vouchers Payable 2,300
The comprehension of accounting expectations in accounting remains a key tool to the oil and gas industry. Extensive documentation supports the operations team with their day to day and monthly deadlines and provide additional assurance of journal entries being recorded properly.
Some of the main features of an exploration permit can be reviewed here.
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