Accounting Guideline - contains descriptions and examples of oil and gas accounting and/or auditing practices, methods or guidelines. It also describes processes for specific accounting-related activities or functions and COPAS recommended solutions. They are not intended to interpret any specific provisions of agreements.
Accredited Petroleum Accountant® certification program offered by COPAS.
Board of Directors – elected by the Council to oversee the governance of the organization.
Board of Examiners – Appointed by the COPAS BOD to oversee the administration, development and testing of the APA® program.
COPAS Energy Education – providing quality training in a variety of formats, including classroom, private classes for individual companies, webinars and self-study. Private courses can be customized to company needs and requirements.
Computerized Equipment Pricing System. A COPAS proprietary materials pricing system, subscription based.
ePublication – an annual subscription providing a single source option to key COPAS Publications. The search criteria in this compilation allows the most effective and accurate method of searching keywords in COPAS publications. Enter any word or key phrase and all occurrences of this entry displays in the appropriate COPAS Accounting Guideline and Model Form Interpretation. A company library must-have.
Emerging Issues – a subcommittee of the COPAS Audit Standing Committee.
Joint Interest, commonly thought of as the “cost” or “expense” side of the operation. Also, the abbreviation for the COPAS Joint Interest Standing Committee.
Joint Interest Billing – Operator’s method of recovering operating expenses and capital charges from working interest owners of the Joint Account. This is done utilizing accounting software and providing for the gross costs and the net share to the each working interest.
Joint Operating Agreement – a contractual document describing how the agreement will be conducted.
Joint Venture – an agreement between two or more persons or companies to drill, develop, and operate a jointly owned property or properties. Each owner has an undivided interest in the property or properties.
Model Form, also known as Model Form Accounting Procedure, or “Accounting Procedure.” This document is designed to be an exhibit attached to a standard American Association of Professional Landmen (AAPL) Joint Venture Operating Agreement. Accounting Procedure, thus becoming part of the contract between operator and non-operator. Sometimes referred to in slang as “the COPAS agreement.”
Model Form Interpretation – these provide a clarification of intent of the model form accounting procedure. The MFI does not modify model form language. The MFI will quote the language being interpreted and give the reason for the clarification. Each MF issued has a corresponding MFI.
Model Form Modification - changes or adds to the language of the model form. It must have an effective date and state that changes are prospective.
The COPAS Small Oil and Gas Companies Standing Committee.
Severance Tax Guide – contains the Severance Tax Guide, the Incentives Tax Guide, and the Indian Tax Guide. These guides are arranged by state or tribe and are designed to provide a usable day-to-d reference for taxes on oil and gas production, and to provide a summary of the various tax incentives offered by the states. The guides can assist users in identifying those governmental entities that have severance tax provisions and assist in the accounting for such taxes. They can also assist in planning operations in those various states and tribal areas.
Training and Reference – includes Training Modules, Programs, Videos and Guides. This category also contains Data Compilations, Surveys, Discussion Papers and Assimilations of Regulatory Data.
American Association of Petroleum Geologists
American Association of Professional Landmen
American Gas Association
American Petroleum Institute
Council of Petroleum Accountants Societies, Inc.
Interstate Natural Gas Association of America
Independent Petroleum Association of America
National Association of Division Order Analysts
Society of Petroleum Engineers
Society of Exploration Geophysicists
Barrel, a standard for measuring oil production, representing 42 US gallons.
Billion Cubic Feet of natural gas.
Barrel Oil Equivalent – the amount of energy produced by an mcf of gas, usually converted on a 1:6 basis. Some companies use other ratios, such as 1:8, depending on the gas quality.
Barrels of Oil per day.
When extracted from the reservoir, crude oil will contain an amount of water and suspended solids. The impurities settle at the bottom of the tank and are known as basic sediment & water. It is measured as a volume percentage of the production stream.
British Thermal Unit – the amount of heat or energy needed to raise one pound of water one-degree Fahrenheit.
Cubic Foot – The volume of gas contained in one cubic foot of space at a standard pressure base and at a standard temperature base.
Daily Contract Quantity – the daily quantity of gas to be delivered or taken under a gas purchase contract.
Dekatherm - defined as 1 million British thermal units, also written "MMBtu."
Gigajoule – one billion Joule.
Gas/Oil ratio – the relations between the volume of oil and the volume of gas produced from a well.
Gas well gas – a term used to distinguish gas produced other than in association with the production of oil from and oil well.
Lease Automatic Custody Transfer – an automatic device used for moving and measuring oil from lease storage to the pipeline.
Louisiana Light Sweet – a grade of crude used in NYMEX Oil trading.
Thousand Cubic Feet – the standard unit for measuring the volume of natural gas.
The amount of energy produced from a barrel of oil, usually converted on a 6:1 basis. Like oil, other ratios may be preferred, depending on the quality of the gas molecule.
Million Barrels of Oil Equivalent.
Million British Thermal Units – the basic unit of measure in sales of natural gas.
New York Mercantile Exchange – founded in 1872, the world's largest physical commodity futures exchange, headquartered in lower Manhattan.
Oil Well Gas – a byproduct in the form of gas from an oil producing well.
Oil/Water ratio – the relations between the volume of oil and the volume of water produced from a well.
Quadrillion - an abbreviation for a quadrillion (1,000,000,000,000,000) BTU's.
Trillion Cubic Feet - a volume measurement that is equivalent to approximately one Quad of BTU.
West Texas Intermediate is a grade of crude oil used as a benchmark in oil pricing. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content. It is the underlying commodity of New York Mercantile Exchange's oil futures contracts.
Products of Byproducts
Liquefied natural gas - natural gas stored as a super-cooled (cryogenic) liquid.
Liquefied petroleum gas – butane and propane separated from natural gasoline and sold in liquid form. Produced as a byproduct of gas processing and petroleum refining.
Natural gas liquids – hydrocarbons found in natural gas which may be extracted or isolated as LPG and Natural Gasolines.
Materials and Materials Handling
Also referred to as BUTT, or Buttress end finish, a type of finish applied to end of each tubing or casing joint to allow the joint to be connected to other joints.
Computerized Equipment Pricing System. A COPAS proprietary materials pricing system.
Abbreviation for hundredweight, a unit of measurement for weight used in certain commodity trading contracts. In North America, a hundredweight is equal to 100 pounds. Centum weight.
External Upset Ends.
Historical Price Multiplier.
Inside diameter of tubing or casing.
Long thread and coupled - thread applied to end of each tubing or casing joint to allow the joint to be connected to other joints.
Oil Country Tubular Goods.
Outside diameter of tubing or casing.
Short thread and coupled – thread applied to end of each tubing or casing joint to allow the joint to be connected to other joints.
Land & Legal
Area of Mutual Interest – a term found in joint venture agreements designating a geographical area around the joint venture’s leases. It provides that any joint venture participant obtaining new property rights within the AMI must offer such rights to the joint venture.
After Payout – the status of a well when the revenues exceed the before payout drilling and operating costs and penalties.
Before Payout – the status of a well when all costs and BPO drilling/operating penalties have been applied to the revenue payments.
Communitization Agreement - authorizes communitization or drilling agreements communtizing. or pooling a Federal oil and gas lease, or any portion thereof, with other lands, whether owned by the United States or not, when separate tracts under such. Federal lease cannot be independently developed and operated in conformity.
Division of Interest – using a division order form, this is a contract between all owners of an oil and gas property and the party purchasing production, setting forth the proceeds decimal interest each owner will receive.
Drilling Spacing Unit - an area allotted to a well by regulations or field rules issued by a governmental authority having jurisdiction for the drilling and production of a well.
Gas Balancing Agreement – a contract between two or more parties to account for any differences between measured volumes and confirmed the nominations of gas deliveries in a given timeframe.
Held by Production – is a provision in an oil or natural gas property lease that allows the lessee to continue drilling activities on the property as long as it is economically producing a minimum amount of oil or gas.
Infill well – the addition of wells in a field that decreases average well spacing. This practice both accelerates expected recovery and increases estimated ultimate recovery in like-kind reservoirs by improving the continuity between injectors and producers.
Merger and Acquisition - a general term that refers to the consolidation of companies or assets. M&A can include a number of different transactions, such as mergers, acquisitions, consolidations, tender offers, purchase of assets and management acquisitions. In all cases, two companies are involved. The term M&A also refers to the department at financial institutions that deals with mergers and acquisitions.
Net Profits Interest or Net Proceeds Interest – a decimal interest in production proceeds created from a working interest and measured by a stated percentage of net profits.
Net Revenue Interest – the revenue decimal interest in production proceeds of an oil and gas well after Royalty Interests and Overriding Royalty Interests are deducted.
Overriding Royalty Interest – an interest in oil and gas, carved out of a working interest owner share, produced at the surface, free of the production costs, and in addition to the usual landowner royalty.
Royalty Interest – Landowner or lessors share of oil or gas production , free of costs, but subject to production taxes (unless the Royalty Interest Owner is a governmental unit).
Working Interest – an interest in an oil and gas well with responsibility for the cost of development and operations of the property. Also called an operating interest. A working interest owner in a joint venture acts as operator, all other working interest owners are non-operators.
Financial & Financial Reporting
Ad Valorem Tax – local taxes levied on an oil and gas well, assessed on an individual property value.
Authorization For Expenditure – an expenditure approval form used during the planning process for a well about to be drilled, completed or for other operations above a stated amount.
Conservation Tax – a tax assessed on the severance of minerals from the earth in some governmental jurisdictions.
Depreciation, Depletion and Amortization.
Earnings Before Interest and Taxes.
Earnings Before Interest, Taxes, Depreciation, Amortization.
Enterprise resource planning is the integrated management of core business processes, often in real-time and mediated by software and technology.
Estimated Ultimate Recovery – the quantity of production, used in Reserve Reporting, that approximates the potentially recoverable estimates for an associate well, unit, field, or reservoir. EUR is an estimate of expected ultimate recovery of oil or gas from a producing well using several methods to estimate depending upon the purpose of the study.
An inventory valuation method which assumes that the first items placed in inventory are the first sold during an accounting year, thus “first in, first out.”
Geological and Geophysical costs, such as exploratory costs of topographical, geological, or geophysical surveys, along with the costs to obtain the rights to conduct these surveys.
Intangible Development (Drilling) Costs – costs associated with drilling a well that are not recoverable. Examples of IDC costs include the cost of the lease, the cost to drill the well, Geological & Geophysical costs. IDC costs are subject to Depletion and recovered over the life of the proven reserves.
An inventory valuation method which assumes that the last items placed in inventory are the first sold during an accounting year or “last in, first out.”
Lease Operating Expense. – an ongoing expense to conduct regular operations of a well, unit, lease, or area captured in the Income Statement.
Lease Operating Statement – a statement of Revenues and Expenses on a property/well level, field level, or other consolidated basis that demonstrates the revenues and expenses involved in the operations.
Present Value at 10% - utilized in the reserve report to provide a current value of approximated oil and gas revenues in the future, minus anticipated expenses, discounted using a yearly discount rate of 10%. Used primarily in reference to the energy industry, PV10 is helpful in estimating the present value of a corporation's proven oil and gas reserves.
Revenue Netting – accounting method used to net the JIBs to the REV generated for a specific asset (well, unit, etc.) to recover the cost of operation in lieu of receiving a payment from the WI owner.
Return on Investment – a performance measure used to evaluate the efficiency of an investment or compare the efficiency of a number of different investments. It measures the amount of return on an investment, relative to the investment's cost.
Severance Tax – a tax imposed on the removal of nonrenewable resources such as crude oil, condensate and natural gas, coalbed methane and carbon dioxide. Severance tax is charged to producers, or anyone with a working or royalty interest, in oil or gas operations in the imposing jurisdictions.
Standard Measurement of Oil and Gas – a supplemental oil and gas financial statement disclosure used to reconcile the year-over-year changes in the reserve reports. The SMOG is not part of the CPA attestation, so not part of the audit, but required for disclosure purposes by the SEC.
Tangible Development (Drilling) Costs - costs associated with drilling a well that are recoverable. As an example, surface equipment, certain casing and tubing are recoverable, and represent tangible drilling costs. TDC are subject to depreciation.
Operations, Production, and Environmental, Health & Safety
Bottom Hole Pressure – reservoir or rock pressure at the bottom of the hole.
Blowout Preventer – a safety device to shut in the well in the event of a sudden, violent discharge of oil, gas, drilling mud, and sometimes water, from an uncontrolled flow from a well.
Bureau of Safety and Environmental Enforcement - the lead US governmental agency in charge of improving safety and ensuring environmental protection relating to the offshore energy industry, mainly natural gas and oil, on the Outer Continental Shelf (OCS).
Drill Stem Test.
Enhanced Oil Recovery – a method using sophisticated techniques that alter the original properties of oil by chemical flooding (eg. micellar polymer flooding), miscible flooding (eg. CO2) or thermal recovery (eg. heat from steam or in-situ combustion).
Any object dropped or stuck in a wellbore during drilling, completion or workover operations. Activities to recover the object are known as fishing.
Flowing Tubing Pressure.
integrated operations center.
Measurement While Drilling – is a type of well logging that incorporates the measurement tools into the drillstring and provides real-time information to help with steering the drill.
Outer Continental Shelf.
Plug and abandon – placing a plug in a dry hole, abandoning the well, and reclaiming the surface.
Pipeline Inspection Gauge – used to inspect pipelines and flowlines to determine if the line is running smoothly or if maintenance is required. The PIG is introduced into the line via a pig trap, which includes a launcher and a receiver. They are critical to the oil and gas industry in upstream and midstream operations.
Personal Protective Equipment – safety clothing, eyewear, footwear and equipment worn by oil and gas workers.
Pound of Pressure per Square Inch – An English system of measure of the amount of pressure on an area that is one inch square. Compressor stations on transmission pipelines are generally built every 50 to 100 miles along the length of a transmission pipeline, allowing pressure to be increased as needed to keep the gas moving.
Pound of Pressure per Square Inch Absolute – where the pressure is relative to a vacuum rather than the ambient atmospheric pressure.
Production Spacing Unit – an area allotted to a well by regulations or field rules issued by a governmental authority having jurisdiction for the drilling and production of a well.
Royalty in Kind – the right to receive what is due under the royalty interest in specie, (in the oil and gas itself).
Remote Technology Center – Technology that enables remote monitoring and/or control of oil and gas operations.
Supervisory Control and Data Acquisition Systems - generally refers to an industrial computer system that monitors and controls a process.
Salt Water Disposal – the disposition of salt water produced with the oil from a reservoir.
Total Depth – The total depth from the surface to the bottom of the well.
US Governmental Organizations
U.S. Department of Energy – a cabinet-level department of the United States Government concerned with the United States’ policies regarding energy and safety in handling nuclear material.
Energy Information Administration - A governmental agency formed in 1977 as an advisor to the DOE. The EIA is responsible for objectively collecting energy data, conducting analysis and making forecasts.
Bureau of Land Management – an agency within the US Department of the Interior tasked with managing the resources and minerals on US government property.
Bureau of Indian Affairs – an agency within the US Department of the Interior tasked as a witness to and a principal player in the relationship between the Federal Government and Indian tribes and Alaska Native villages.
Office of Natural Resources Revenue – the US agency that exercises the royalty and revenue management functions formerly under the Minerals Management Service, including royalty and revenue collection, distribution, auditing and compliance, investigation and enforcement, and asset management for both onshore and offshore activities.
Environmental Protection Agency – established in 1970 under the United States President Richard Nixon. The EPA is an agency of the United States federal government whose mission is to protect human and environmental health.
Federal Energy Regulatory Commission – a United States government agency, established in 1977 to oversee the country’s interstate transmission and pricing of a variety of energy resources, including electricity, natural gas and oil.
United States Geological Survey - a scientific agency of the United States government. The scientists of the USGS study the landscape of the United States, its natural resources, and the natural hazards that threaten it.