What it is
Depletion is usually the largest non-cash expense for an oil and gas producer, and it depends on two inputs the auditor cannot see directly: capitalized cost and proved reserves. This workbook recomputes the unit-of-production rate for each field or cost pool and the resulting expense, so the client’s depletion can be compared with an independent figure.
You enter the entity’s method, full cost or successful efforts, from its accounting policy; the cell starts blank. The method decides whether estimated future development costs enter the depletable base. A ceiling test tab for full cost companies compares net capitalized cost with the ceiling and shows the cushion or the write-down.
When to use it
- At year end, to recompute depletion by field from the reserve report and the cost records.
- At each quarter end for full cost companies that run the ceiling test every quarter.
- When a reserve revision or a large acquisition changes the rate during the year.
What’s inside
- Depletion tab: 25 fields or cost pools with rate, expense, ending cost and ending reserves
- Method input for full cost or successful efforts, blank until you enter the entity’s policy
- Flags for production above the reserve base and rows with no reserves
- Ceiling test tab with ceiling, cushion and write-down indicator
Standard cited
This template follows 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
Where do the reserves come from?
From the reserve engineer’s report. Record the report date and the engineer in the file and test the reserve data as the work of a specialist. Use one unit of measure for reserves and production.
How does the method change the result?
Enter the method the entity’s accounting policy uses; the workbook has no default and prompts until it is filled. Under full cost, estimated future development costs are added to the depletable cost base. Under successful efforts they are not. If your policy uses different reserve classes for different cost types, run those costs as separate rows.
Does the ceiling test apply to successful efforts companies?
No. The tab shows Not applicable for successful efforts. Those companies test properties for impairment on a different basis, which is outside this workbook.
Related templates
- Fixed Asset Rollforward (Excel)
- Oil and Gas Asset Retirement Obligation Rollforward
- Audit Program: Oil and Gas Producer
- Analytical Procedures Expectation Workpaper (AU-C 520)
Last updated 11/05/2026. All free templates.