1. Grant Name: Undergraduate Research Grant Program of spring 2016
Project Title: From Barrels to Balance Sheets: The Distinct Accounting Principles within the Oil and
Gas Industry
Faculty Mentor(s): Songtao Mo
Department: College of Business; Accounting
Amount Requested: $300.00
Student Information (for each student)
Name: David Haddad
PUID: 026741225
Email Address: dhaddad@pnw.edu

2. 1
Project Title: From Barrels to Balance Sheets: The Distinct Accounting Principles within the Oil and
Gas Industry
Abstract/Problem Statement/Research Question:
The accounting principles & methods throughout oil and gas companies have certainly encountered an
insurmountable change in the past century. As the petrol industry becomes more advanced, financial
reporting, accounting principles, audit procedures, and financial issues become more complicated. This
exploratory study will examine and evaluate accounting methods for financial reporting within the petrol
industry, namely, the Successful Efforts Method (SE) or the Full Cost Method (FC). The key distinction
between both methods consists of the handling of operating expenses, with respect to an organization's
exploration activities. How does this affect net income, the balance sheet, or cash flows? Depending on
the selection of accounting principles, one method either increases or decreases the overall amounts in all
three categories. Likewise, this study will examine the potential effects on foreign currencies, specifically
MENA territories, as these commodities fluctuate in price. My aspirations for conducting this research
hail from the combination of my ethnical background and passion for the financial & accounting sector.
Significance of the Problem (Rationale)/Literature Review:
Oil is a vital source of energy for the world and is likely to remain for many decades to come, even under
the most optimistic assumptions of growth in alternative energy sources. For centuries, the majority of the
Middle Eastern hemisphere has continued to dominate in the petroleum sector. The expansion of
petroleum establishments throughout Middle Eastern territories has affected many factors within the
world economy. Since the implication of standardized accounting principles, financial reporting methods,
and auditing procedures have created two alternative views of the realities of exploring and developing oil
and gas reserves. The research conducted throughout this project will not only look at the various
accounting factors within the petroleum sector throughout the Middle East, but also the future of
accounting practices when dealing with gas & oil. Undoubtedly, timely and accurate research is vital for
undertaking more sound accounting policies for coping with various risks under a dynamic and rapid
integration of the world economies.
State Hypothesis or Objectives (Outcomes):
This research will address the two most successful methods for financial reporting within the petrol
industry, which consist of either the Successful Efforts Method or the Full Cost Method. In addition, a
detailed analysis of oil & gas audit procedures will demonstrate the probable potential benefits if
practiced efficiently. There are three research objectives to achieve in the research project:
1. Understand the initial establishment of the petroleum industry throughout the Middle Eastern hemisphere
and the impacts it has on the world economy;
2. Examine the details of the Successful Efforts Method and the Full cost Method with respect to the oil &
gas industry; Compare and evaluate the two methods (Successful Efforts and Full Cost Methods) in the
context of General Accepted Accounting Principles in the United States of American (U.S. GAAP) and
International Financial Reporting Standards (IFRS);
This project allows an accounting undergraduate student, like me, to use attained knowledge and
personal experiences while linking academia and culture. My personal objective in this research would be
to demonstrate my research capacities. The successful execution of the research plan in this research
project will help prepare me for my goal in pursuing Master and Ph.D. degrees in Accounting, Finance, or
Econometrics.

3. 2
Research Design, Methodology, and Activities (Research plan):
The research methodology to achieve the research objectives stated above will consist of these six steps:
1. A thorough literature review in the field of the petroleum industry, Middle Eastern territories, political
instability, and accounting principles;
2. Conduct a report using advanced economic modeling and analysis as well as survey data gathered from
petro-companies and publicly available sources to explain the role the oil & gas industry plays in the
world economy;
3. Create multiple types of graphs explaining crucial accounting factors (financial reports, acquisition costs,
exploration costs, development costs, production costs, etc.);
4. Compare balance sheet differences & similarities with respect to the Successful Efforts Method & Full
Cost Method;
5. Evaluate the impact of differing levels of capitalized assets;
6. Evaluate the context and the appropriate method for petroleum accounting practices and future changes
within the industry.
7. To analyze the fluctuations of specific commodities (oil & gas) over a given period of time.
8. To analyze the correlation between universal currencies and the price of oil and gas.
Budget:
Capital Materials: Books:
 Petroleum Accounting: Principles, Procedures & Issues, 7th edition Seventh Edition by John Brady
(Author), Charles (Chuck) Chang (Author), Dennis R. Jennings (Author), Rich Shappard (Author), Molly
McDonald-Ogden (Editor)
- Price (Amazon): $110.94
- This book is published by one of the leading accounting firms, PricewaterhouseCoopers' (PwC), and will
help aid in describing the two methods that are being examined in this project.
 Fundamentals of Oil & Gas Accounting, 5th Edition by Charlotte J. Wright (Author), Rebecca A.
Gallun (Author)
- $81.47
- This book describes the fundamentals of specific standards in the gas & oil industry, and will help the
explanation process of why certain methods are used on the balance sheet.
Subtotal = $192.71
Consumable Materials: Print and publication materials
Makesigns.com/Graphicsland: Official research poster: 36 x 48
- Poster: $99.87
- Miscellaneous fees associated with poster: $10
- This company specializes in printing research projects. I have dealt with them through previous
research fairs. They offer quality service & products for a low price.
Subtotal = $109.87
TOTAL BUDGET REQUIRED: $302.58

4. 3
References
Price Waterhouse Coopers. (2011) Financial Reporting in the Oil and Gas Industry. Available at
https://www.pwc.com/gx/en/oil-gas-energy/reporting-regulatory-compliance/assets/financial-
reporting-oil-gas-industry.pdf
Ernst & Young. (2009) US GAAP vs. IFRS: The Basics: Oil and Gas. Available at http: //www.ey.com.