Whether you are just starting out or are thinking about pursuing a career in Canada oil and Gas Accounting, it is important to learn about the industry and what to expect. This article will provide an overview of the profession and career prospects. It will also cover revenue accounting, exploration, and development costs, and the APA(r) credential program.
Overview
Throughout the last three decades, Canada’s crude oil sector has experienced major changes. In addition to high prices and increased production, geopolitical events and climate change have influenced the sector’s performance.
One of the most important factors to consider is the value of the resource. This information can provide a proxy for how much a company is valued.
Another factor that may affect oil investment decisions is transportation constraints. The cancellation of the Keystone XL pipeline, which is expected to reduce pipeline capacity, could limit the industry’s rebound. In addition, weak energy demand and a strong growth in clean energy may prevent a recovery.
Over the past 30 years, Canadian crude oil exports have steadily increased. In 2019, they accounted for 14.1% of Canada’s total exports. However, the volume of Canadian oil exports fell in February 2021.
In 2019, the government of Alberta contributed approximately 22% of the revenue from oil and gas resources. In Ontario, 2,327 oil and gas wells were operating. In Quebec, 372,000 barrels per day were refining.
In Canada, the industry is comprised of many domestic and international firms. Some of these companies are involved in both upstream and downstream activities. The federal and provincial governments coordinate energy policy. They oversee the development of oil and natural gas resources and regulate their production.
A look back at Canadian crude oil exports over the past 30 years reveals key factors that have shaped the sector’s performance. These include global demand and prices, climate change, and geopolitical events. These changes have also impacted the balance of trade.
In order to understand the state of the Canadian oil and gas extraction industry, it is important to evaluate production, exports, and investments. Although the industry has almost recovered, challenges remain.
Revenue accounting
Changing the way oil and gas revenue accounting is done can be challenging for producing companies. There are a number of departments within the company that contribute to the process. These departments can include accounting, valuation, and production.
The most difficult part of revenue accounting in the oil and gas industry is estimating future production levels. This can be a time-consuming task. But it’s one that needs to be performed. In order to make it possible, a company may need to streamline its processes. It’s also important to validate its business processes.
Luckily, the AICPA has put together an O&G industry task force to address these challenges. The association has produced an annual publication to discuss FASB updates and provide industry-specific tax guidance.
The FASB recently issued a final standard on revenue from contracts with customers. While this new revenue recognition model is not expected to cause a significant change in commodity sales transactions, it will likely affect drilling and take-or-pay contracts. In addition, it will likely impact other arrangements such as volumetric optionality.
The AICPA’s Financial Reporting Executive Committee (FREC) has weighed in on the benefits of using estimated output figures in the process. The agency states that using estimated production is appropriate in situations where the actual volumes are not known in advance.
Aside from the aforementioned standard, a company’s back-office accounting teams will likely need to reassess current revenue accounting practices. While some of the changes made by ASU are deemed to be a nod to current practice, others may be a bit more surprising.
The AICPA has even gone as far as to produce an accounting guide to revenue recognition. The guide is a must-read for those looking to learn more about the new standard.
Exploration and development costs
Expenditures on oil and gas exploration and development are an integral part of an upstream company’s fiscal activity. These costs include geological studies, drilling productive wells, and carrying costs related to unproved properties. In addition, there are numerous other expenses associated with these activities. In order to calculate these costs, an industry survey is produced annually.
One of the most common methods used by Canadian oil and gas companies to account for their exploration and development costs is the full-cost method. In this method, all costs associated with an activity are capitalized in a single Canadian cost center. This includes the capital expenditures involved in drilling the well, the associated operating costs, and any other expenses incurred in implementing the project.
The full cost method is not only more efficient, it also yields more accurate results. This is especially true when the cost of an activity is being calculated on a unit of production basis. This calculation entails a thorough review of capitalized costs to determine whether they are recoverable based on expected future cash flows. The net cost of an activity is then calculated as the sum of the cost and the corresponding revenue. This amount is then depleted over a period of time, thereby providing a measure of profitability.
Another method used to calculate the cost of an activity is the ceiling test. This method identifies the ultimate recoverable amount from the expected future net revenues. This cost is then depleted in proportion to the number of units of production. If the net cost of the activity is greater than the ultimate recoverable amount, additional depletion and depreciation is provided.
APA(r) credential program
APA (pronounced as in ah-poh) is a Canadian industry organization dedicated to educating and certifying accounting professionals to handle the most important tasks of the industry. The APA credential carries with it the prestige of a certified professional. The APA (r) designation isn’t mandatory, but it’s a requisite if you’re hoping to get hired. Unlike most certification programs, the APA (r) designation is a meritorious award that’s rewarded to only the best of the best. The APA (r) credential is a must-have for anyone looking to land a job in the oil and gas industry.
The APA (r) credential is the best way to distinguish yourself from the competition. The APA (r) designation is awarded to the top 5% of the applicant pool. The APA (r) credential also serves as a proof of competence to the employer that you have the requisite qualifications to perform the required duties. The APA (r) credential can be completed in just under five years.
Career prospects
Whether you are interested in a career in Canada oil and gas accounting or any other industry, it’s important to keep up with the latest job market trends. The right mix of skills can help re-equip the workforce for the future.
The industry has more than 533,000 Canadian jobs. In addition to the high demand, the oil and gas sector has a great outlook for the future. It is expected to experience steady growth over the next decade. The industry offers a range of jobs, from the rig work of the upstream industry to the behind-the-scenes work of the business and operations support teams.
The number of employment opportunities in the industry is projected to reach nearly 1.9 million by 2035. Approximately 960,000 of these positions will be in the skilled and semi-skilled blue collar sectors. These roles include mechanics, electricians, truck drivers, and more.
There are also thousands of in-demand occupations throughout the country. For example, in the UK, the Oil and Gas UK Workforce Report shows that 283,000 jobs are currently in the industry. The report also states that there are 10,000 new entrants in the oil and gas sector by 2025.
The oil and gas industry is a global sector, and offers opportunities across the globe. It is home to world-class multinational companies, smaller organisations, and more. It provides perks to qualified individuals, and offers a variety of career paths.
The oil and gas industry is experiencing a high level of employment sensitivity, and will need more than 30,000 new employees to meet its demands. The demand will be based on replacement of retiring workers, as well as accelerated development policies.
