Production payment interest

A production payment interest is the right to receive revenue from oil and gas production,  where the right reverts back to the interest from which it was created after a certain amount of production volume or revenue is reached. An organization obtains a production payment interest when it purchases a percentage of the proved reserves of a field.

A payment made to the holder of this interest is recorded as it is received or becomes a receivable.

Related Courses

Oil and Gas Accounting