Extractive activities are the activities undertaken by entities when searching for, and ultimately extracting, minerals, oil or natural gas. The activities involve the following four phases:

• Exploration: the search for deposits of minerals or oil and gas
• Evaluation: assessing the quantity and quality and viability of the deposits found and the economic viability of their extraction
• Development: undertaking works to access the deposit and to construct the infrastructure necessary to extract the minerals or oil and gas
• Production: the extraction of the minerals or oil and gas from those deposits

The area of extractive industries poses some very specific challenges resulting from the uncertainties that are faced by entities pursuing extractive activities: for instance assessing the quantities that may be found and the costs involved in accessing and extracting the resources. A research team comprising members of the Australian, Canadian, Norwegian, and South African accounting standard-setters analysed and discussed accounting for extractive activities with a wide range of stakeholders to identify a possible approach for an IFRS. The DP contains the views of the project team – it does not represent the views of the Board. The DP addresses the following four questions:

• How to estimate and classify the quantities of minerals or oil and gas discovered
• How to account for minerals or oil and gas properties
• How minerals or oil and gas properties should be measured
• What information about extractive activities should be disclosed

After considering the responses received on the DP, the Board will decide whether to add the project to its active agenda. Comments are requested by 30 July 2010. Click for IASB Press Release (PDF 103k). The DP may be downloaded without charge from the IASB's Website www.iasb.org (then click on 'Comment on a Proposal'). One of the authors is Aase Lundgaard, a partner in Deloitte Norway. Click for IAS Plus Project Page.