What it is
Plugging and abandoning wells is a future cash outflow that the entity records today at present value. The liability moves every year through accretion, new wells, revised estimates and settlements. This workbook measures the obligation at inception by well or site and rolls it forward to the year-end balance.
The Initial measurement tab inflates the estimate in current dollars and discounts it at the credit-adjusted risk-free rate. The Rollforward tab adds accretion, revisions and settlements, calculates the gain or loss on settlement, and the Tie-out tab agrees the ending liability and the expense to the ledger.
When to use it
- On any audit of an oil and gas producer, a gathering company or an owner of retirement obligations on leased land.
- When wells were plugged or estimates were revised during the year.
- When the discount rate or the cost estimate for the entire field was updated.
What’s inside
- Initial measurement tab: inflated cost and present value by well or site
- Rollforward tab: beginning, incurred, accretion, revisions, settled, paid and ending
- Gain or loss on settlement by site
- Tie-out tab for the liability, accretion expense and settlement result
Standard cited
This template follows ASC 410-20 / ASC 932. It is written in our own words, except for phrases the standard requires the document to contain, with [bracketed placeholders] for client details, amounts in USD and dates as MM/DD/YYYY. Check it against the current standard and your firm’s methodology before use.
Questions
Which discount rate applies to a revision?
Downward revisions use the rate of the original layer. Upward revisions use the current credit-adjusted risk-free rate. Use one row per layer when layers carry different rates.
Does a revision go through income?
No. A revision to the estimated timing or amount adjusts the liability and the related asset. Accretion expense and settlement gains or losses go through income.
How is accretion calculated for wells added during the year?
Enter the fraction of the year at the top of the Rollforward tab from the entity’s policy, for example actual months outstanding ÷ 12. The workbook has no default; it shows a prompt while new obligations exist and the fraction is blank.
Related templates
- Oil and Gas Depletion Unit-of-Production Schedule
- Fixed Asset Rollforward (Excel)
- Audit Program: Oil and Gas Producer
- Debt and Interest Rollforward Schedule
Last updated 11/05/2026. All free templates.