Full cost accounting

An accounting method where assets can be 'pooled' by geographical area, rather than by licence or field. This means that the costs will be depreciated over the reserves of all of the assets within the pool, rather than across a single asset. Additionally, unsuccessful exploration can be added to the pool and be depreciated, rather than being written off when they are declared uncommercial. Full cost accounting has the benefit of allowing the costs of disappointing developments to be spread across the entire portfolio, and therefore reflecting the portfolio nature of running an oil and gas business.