Navigation: Running Reports > Default Reports >
A cost depletion report is a report that estimates the proportion of the remaining reserves that was produced/sold during a given tax year (a period of 12 months). This report is a version of the cost depletion method of deduction that mineral interest owners may use to reduce their oil and gas tax liabilities.
The report is presented on a barrel of oil equivalent (BOE) basis, using un-shrunk volumes for oil and gas production, net to the interest owner. The net reserves are from the report date to the economic limit (ECL) of the case. Cost Depletion Ratio is calculated from the relationship:
Cost Depletion Ratio = (First Year Net BOE) / (Net Reserves BOE)
BOE = Net Un-shrunk Oil + (Net Un-shrunk Gas / BOE Factor)
Default BOE Factor is set in the oil equivalence tab of the Phase configurations database setting. This is used as the starting value for converting gas volumes to BOE. A different value can be specified in the parameters section of the report in the report unit for the selected reporting convention.
Note the following:
•The report date should be set to the beginning of the tax year. If the tax year for which the report is generated is FY 2022, the report date should be set to 1/1/2022.
•Precedence setting should be set to history, which is the PHDWin default. If the precedence setting is set to projection for any case, that setting is honored. If warning is enabled, a (1) is displayed next to the First Year Net BOE value of the case to highlight that projection precedence is selected.
•There should be historical production for the full tax year. If any month in the 12-month period is missing historical data, it will be augmented with existing projections. If warning is enabled, a (2) is shown next to the First Year Net BOE value to highlight the presence of incomplete historical production for the tax year.
•A zero for First Year Net BOE shows a depletion ratio of 0 while a zero for Net Reserves BOE shows a depletion ratio of N.A
Warnings, if present, should be addressed before printing your cost depletion report. Warnings can also be disabled via the checkbox on the parameters section.
Example of a Cost Depletion Report
This example was prepared for the 2022 tax year. Hence the report date is 1/1/2022. All cases are missing at least one month of historical production data. The precedence setting on 3 cases are set to projection. The warnings are shown on the report with a note at the end of the report.
We recommend that the warning signs be properly addressed. If Show Warnings is disabled, the report is updated as follows:
|
