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agreement must specify the work to be performed or
the conditions to be met.
For the years in issue, Exxon, like most other oil and gas
companies, did not recognize on its financial balance sheet
statements estimated future DRR costs as a fixed liability.
Rather, Exxon disclosed estimated future DRR costs in a note to
its financial statements and, as required by FAS 19, reflected
and claimed estimated future DRR costs relating to Prudhoe Bay
and to its other oil and gas facilities in its annual
depreciation calculations on its financial income statements.
As indicated, during the years in issue, no PBU partnership-
wide study was made of estimated future Prudhoe Bay DRR costs.
Rather, each oil company, including Exxon, with a working
interest in the PBU partnership generally developed its own
estimate of future Prudhoe Bay DRR costs.
Set forth in the schedule below for 1977 through 1988 are
the amounts of its share of total future Prudhoe Bay DRR costs
that, at the end of each year, were estimated by Exxon. The
amounts vary because of differences in methodology and
assumptions that were used from year to year to estimate total
future DRR costs.
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