REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED) 198

Tax Assessments

The government is authorized and required to make inquiries, determinations, and assessments of all taxes that have not 

been duly paid. Unpaid assessments result from taxpayers filing returns without sufficient payment, as well as enforcement 

programs such as examination, under-reporter, substitute for return, and combined annual wage reporting. Under federal 

accounting standards, unpaid assessments are categorized as taxes receivable if taxpayers agree or a court has determined the

assessments are owed. If neither of these conditions are met, the unpaid assessments are categorized as compliance 

assessments. Assessments with little or no future collection potential are called write-offs. Although compliance assessments 

and write-offs are not considered receivables under federal accounting standards, they represent legally enforceable claims of 

the government. There is, however, a significant difference in the collection potential between compliance assessments and 

receivables.

Compliance assessments and pre-assessment work in process are $97.7 billion and $90.9 billion for FYs 2023 and 2022, 

respectively. The amount of allowance for uncollectible amounts pertaining to compliance assessments cannot be reasonably 

estimated, and thus the net realizable value of the pre-assessment work-in-process cannot be determined. The amount of 

assessments that entities have statutory authority to collect at the end of the period but that have been written off and 

excluded from accounts receivable are $76.6 billion and $77.3 billion for FYs 2023 and 2022, respectively.

Federal Oil and Gas Resources

The DOI is responsible for managing the nation’s oil and natural gas resources and the mineral revenues on federal 

lands, both onshore and on the Outer Continental Shelf. This management process can be broken down into six essential 

analysis components: pre-leasing, post-leasing and pre-production, production and post-production, revenue collection, fund 

disbursement, and compliance.

Federal Oil and Gas Resources as of September 30, 2023, and 2022

Offshore Onshore Total

(In billions of dollars) 2023 2022 2023 2022 2023 2022

Oil and lease condensate 33.3 34.7 29.4 29.1 62.7 63.8

Natural gas, wet after lease separation 1.8 2.0 14.2 22.4 16.0 24.4

Total 35.1 36.7 43.6 51.5 78.7 88.2

The above table presents the estimated PV of future federal royalty receipts on estimated proved reserves12 as of 

September 30, 2023, and 2022. The federal government’s estimated petroleum royalties have as their basis the DOE’s EIA 

estimates of proved reserves. The EIA provides such estimates directly for federal offshore areas and they are adjusted to 

extract the federal subset of onshore proved reserves. The federal proved reserves were then further adjusted to correspond 

with the effective date of the actual production for calendar year 2021, the most recently published EIA proved reserves 

report and then are projected, separately for oil and natural gas, over time to simulate a schedule of when the reserves would 

be produced. Future royalties are then calculated from these production streams by applying future price estimates by the 

OMB, production growth estimates from the EIA’s 2023 Annual Energy Outlook, and effective royalty rates. The valuation 

method used for gas captures royalties from three products–dry gas, wet gas, and natural gas liquids–which collectively are 

reported as natural gas, wet after lease separation. The PV of these royalties are then determined by discounting the revenue

12 Per the EIA, lease condensate is a mixture consisting primarily of pentanes and heavier hydrocarbons which is recovered as a liquid from natural gas in 

lease separation facilities. This category excludes natural gas plant liquids, such as butane and propane, which are recovered at downstream natural gas 

processing plants or facilities. Also, per the EIA, natural gas, wet after lease separation, is the volume of natural gas remaining after removal of lease 

condensate in lease and/or field separation facilities, if any, and after exclusion of nonhydrocarbon gases where they occur in sufficient quantity to render the 

gas unmarketable. Natural gas liquids may be recovered from volume of natural gas, wet after lease separation, and at natural gas processing plants 

(https://www.eia.gov/dnav/ng/TblDefs/ng_prod_deep_tbldef2.asp).
199 REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)

stream back to the effective date at a public discount rate assumed to be equal to the OMB’s estimates of future 30-year 

Treasury bill rates for offshore, and a weighted average of the U.S. Treasury yield curve from trading dates for the most 

recently completed fiscal year for onshore. The 30-year rate was chosen because this maturity life most closely approximates 

the productive lives of the proved reserves estimates. 

Estimated Federal Oil and Gas Petroleum Royalties (Proved Reserves) 

as of September 30, 2023, and 2022

Average Purchase Average Royalty

Quantity (In millions) Price ($) Rate (%)

Petroleum Category 2023 2022 2023 2022 2023 2022

Oil and lease condensate (Bbl):

Offshore 4,434.0 4,142.4 78.52 92.74 13.45 13.29 

Onshore 4,645.3 2,946.7 78.40 93.43 12.33 12.38 

Total 9,079.3 7,089.1

Natural gas, wet after lease separation 

(Mcf):

Offshore 4,203.1 3,911.4 5.16 6.92 11.19 12.41 

Onshore 43,543.2 37,663.1 5.70 6.96 11.00 11.22 

Total 47,746.3 41,574.5

Bbl = barrels

Mcf = 1,000 cubic feet

The table above provides the estimated quantity, a weighted average purchase price, and a weighted average royalty rate 

by category of estimated federal petroleum royalties at the end of FYs 2023 and 2022.13 The estimated quantities, average 

purchase prices and royalty rates vary by region; the above table reflects an overall weighted average purchase price and 

royalty rate, and is not presented on a regional basis, but is instead calculated based on regional averages. The prices and 

royalty rates are based upon historical (or estimated) averages, excluding prior-period adjustments, if any, and are affected by 

such factors as accounting adjustments and transportation allowances, resulting in effective average prices and royalty rates. 

Prices are valued at the lease rather than at the market center and differ from those used to compute the asset estimated PV,

which are forecasted and discounted based upon OMB economic assumptions. For additional details on federal oil and gas 

resources, refer to the financial statements of DOI. In addition to the oil and gas resources discussed above, the federal 

government also owns oil and gas resources that are not currently under lease. 

13 Gulf of Mexico proved reserves are royalty-bearing volumes. In the Gulf of Mexico, an additional 503.5 million Bbl for FY 2023 and 522.5 million Bbl 

for FY 2022 of proved oil reserves, and 426.2 million Mcf for FY 2023 and 412 million Mcf for FY 2022 of proved gas reserves are not reflected in these 

totals as they are estimated to be producible royalty-free under various royalty relief provisions. The NPV of the royalty value of the royalty-free proved 

reserves volumes in the Gulf of Mexico is estimated to be $3.8 billion for FY 2023 and $4.6 billion for FY 2022.