Section 8 in The Cost Accounting Records (Petroleum Industry) Rules, 2002
8. Exploration and Development Drilling Cost. - (1) The Proper records shall be maintained for the expenses incurred in exploration and development of area covered by a petroleum exploration license or a mining lease for exploration for or production of crude oil and natural gas. These details shall be prepared for onshore and offshore separately. The cost incurred for acquisition of exploration license or mining lease and acquisition of properties shall be treated as deferred revenue expenditure and charged off on a reasonable and equitable basis. Adequate records shall also be maintained as per respective Proforma showing details of exploratory drilling or development expenses incurred on preparatory cost, rig operation cost, transport, well maintenance, other services and depreciation etc. The records shall indicate details or successful or undecided exploratory wells carried as wells-in-progress and successful wells after commercial production created as 'producing properties'. The producing properties shall be depleted applying unit of production method considering the proved developed hydrocarbon reserves or any other methods as per the accepted standards and practices.
(2)The proper records shall be maintained showing details of expenses incurred or provision made in respect of dismantling, abandoning and restoring of on-shore or off shore well sites abandoned during the year and basis followed for charging the abandonment and restoration cost to the product.(3)The proper records shall be maintained in respect of provision made towards impairment of the properties.
