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4 Tips To Using Oil & Gas Accounting Software To Increase Quality

focusonqualityWhen it comes to using a software program for your Oil & Gas accounting, there are several things you should keep in mind to focus your business processes and create a quality financial management system. The following 4 tips help you integrate your software, plan your business systems, and build quality throughout your company:

  1. Automate Financial Reporting – One of the largest parts of oil and gas industry regulatory and tax compliance is regular and accurate financial reporting. Integrate your financial systems so that required monthly, quarterly and yearly reports are generated and filed automatically; this increases quality through reducing the time your accounting team has to spend on menial data-entry tasks and through maintaining communication with interested parties. 
  2. Obtain Real-Time Information – Use modern accounting software to generate immediate real-time, accurate reports. Management and employees can use this for building a system of communication based upon facts; having financial facts is fundamental for any quality management system, and the right software will give you the financial facts regarding your business all the time. 
  3. Reduce Reconciliation – One of the greatest causes of errors between accounting and management is the need for reconciling different accounts, statements and dedicated business funds. With the right integration, reconciliation becomes a matter of automatic updating, not manual data entry. This enables you to set up sinking funds for capital, emergency funds and automatic bill pay/disbursements without feeling like you might be missing some crucial information. 
  4. Stop Manual Data Entry from Business Systems – Much of your business systems, whether it is operating wells or investing in oil & gas, is manually entered into multiple systems by multiple people, causing room for errors, confusion and delay. The right accounting software will pull data from your wells, creating real-time, automatic updates of costs, revenue and profits owed without any manual data entry. 

Although these 4 tips seem like varieties on a theme, automate everything, they are unique parts of your business which often get overlooked when integrating a new accounting software system. And each of these areas (governmental reporting, quality control information, financial planning and site-to business automation) has a drastic effect upon your ability to create quality business systems for your company. 

We have software that can help tie all your systems together into a cohesive unit which will help to increase the quality of your business processes.

 

Take a tour

 


Source: SherWare Blog

Oil & Gas Accounting 101 – Accounts

Oil & Gas accounting isn’t that difficult to understand. Accounting is accounting, so the first step in learning oil & gas accounting is to understand accounting.

Accounts

The basic element in accounting is an account. Accounts are how transactions are grouped and collected. For instance, Cash could be an account. This account could reprecheckbooksent a checking or bank account where a business’s cash or money is kept. Accounts Receivable is another example of an account. This is where money owed to the business is kept. An account called Wages is used to keep track of the wages paid to employees.

Accounts are grouped together according to the type of account. Some of the account groupings are:

  • Assets – this is what the company owns. Includes accounts such as Cash, Inventory, Wells and Land
  • Liabilities – this is what the company owes to others. Includes Accounts Payable, Payroll Taxes and Loans
  • Equity – this is what the company has after all liabilities are paid
  • Income – this is the revenue or economic gains recieved for items sold or services provided. Includes Oil & Gas Revenues, Administration Revenue and Service Revenue
  • Expense – this is the costs the company incurs doing business. Includes Rent, Telephone, Well Expenses and Taxes

Debits and Credits

Every transaction in accounting has at least two parts, a debit and a credit. This is the essence of what’s called double-entry accounting. Because of the two-fold effect of transactions, the total effect on the left, or debit, side will always be equal to the right, or credit, side. All the debits in a transaction must equal all the credits in a transaction.

Here’s a posting example using the cash method: On February 1st, 2015 you receive $25,500 of oil revenue.

Account Date Debits Credits
Cash – Operating 2/1/2015 $25,500
Revenue Payable 2/1/2015 $25,500

Cash is debited and Revenue Payable is credited creating a balanced transaction.

Here are the rules for debiting and crediting accounts. To increase an asset, you debit it; to decrease an asset you credit it. The opposite applies to Liabilities and Equity.

 Accounting Element To Increase To Decrease
 Asset Debit Credit
 Liability Credit Debit
 Equity investment Credit Debit
 Equity withdrawal Debit Credit
 Income Credit Debit
 Expense Debit Credit

Once you have a basic understanding of accounting, understanding a specific type of accounting, such as Oil & Gas Accounting is much easier.

Accounting 101 E-Book


Source: SherWare Blog

New Oil & Gas Accounting Software Site

 

The day has arrived! We’re excited about the new look and think that it will greatly enhance our ability to provide value to our prospective and current clients.

The redesign has been over a year in the making. It’s been a fun process and has stretched us in some ways which I believe are for the better.

We believe we have great oil & gas accounting software and think we should do better about letting the world know about it. 

AM_IconThe Oil & Gas Accounting Manager is our fully integrated, (which means that it has everything in one application), accounting software for oil & gas operators. It includes revenue distribution and joint-interest-billing integrated with all the regular accounting modules like G/L, A/P, A/R and Financial Reporting.

 

The Disbursement & JIB Manager Integrated Edition is our top selling Quickbooks® integrated revenue dmie-small-icondistribution and joint-interest-billing software. Is uses QuickBooks for the accounting module and posts transactions in real time so that you don’t have to enter data twice. We’re the only oil & gas accounting software company that offers this real time integration.

 

dm-small-iconWe also have the Disbursement and JIB Manager which is a basic revenue distribution and joint-interest billing application. It has everything needed to create royalty and working interest owner checks as well as billing for expenses. You would use this application if you already have an accounting application in place which doesn’t handle revenue distribution or joint-interest-billing, and you don’t want to switch.

 

The newest edition to our applications is Well Profits which handles tracking revenue and expenses for oil wp-icon& gas royalty owners and investors. It will also integrate with QuickBooks if you want to keep track of the accounting in QuickBooks but need better reporting at the well/lease level.

 

We’ve been busy and we’re really excited about this next year! Please check out the site upgrade and let us know what you think.


Source: SherWare Blog

10 Steps For Picking the Best Oil & Gas Accounting Software For You

Picking oil & gas accounting software may be one of the most important decisions you make for your company. I mean, after all, how else do you make business decisions if you don’t know how much money is flowing in and out of your business each day? Here are 10 steps to helping you select the best oil & gas accounting software package for your company.

1. Make a list of your company’s needs. Talk to everyone who will be using the software to get their input. Discuss everything from your preferences and what all you need the software to do to what reports you need and end-of-year tasks.oil & gas accounting software

2. Make a list of all the potential oil & gas accounting software packages.This isn’t a list of just the best oil and gas accounting packages out there; it’s more of a collection of everything you can find so you have something to work with when you begin to get picky. List every software package you are aware of, have read about, seen online, heard from others, etc.

3. Set a timeframe for when you’d like to make a decision and for when you’d like to begin implementing a new solution. Being able to define how fast you’ll need to move through these research steps will help you in the long run when talking with software representatives and deciding when the best time to implement you system will be, depending on downtime at your office, end of year times, etc.

4. Decide what your budget range is and how flexible or inflexible it is.It’s never a good idea to eliminate products simply because of price unless it’s REALLY out of your range, but having a ballpark figure will help you as you begin narrowing down the oil and gas accounting packages.

5. Eliminate all oil and gas software packages that aren’t a good fit.This isn’t the first time you’ll see this step in here because of how important it is to keep evaluating throughout the entire process. Many eliminations will come easy at this point.

6. Collect information on your top 4 to 5 choices (or less if you’ve narrowed it down that far). You can get a wealth of information from the Internet by collecting and reading everything off of the company’s website, other user’s reviews and anything else you can dig up. Call or email the company to get any literature maybe not available online or to get any information you couldn’t find online. Talk to peers in your area to see what they use for their oil and gas accounting software and why.

Find out the answers to these questions during your research: Is the software user-friendly? Can it grow as our business grows? What after sale service and support is available? Will the software let me handle distributions and joint-interest billing the way I want to? Will I like how the reports look and how much data can be reported on?

7. Evaluate your choices again and eliminate any that don’t seem to be the best fit.

8. Review the software either through an evaluation or trial version of the software, or by going through an online demo of the software with the company. Make sure you have a list of any questions you want answered by the software company and get to see every aspect of the software that you’ll need to use. Seeing how the software works firsthand will help you determine if it’s user-friendly enough for your company as well.

9. Evaluate your choices again. At this point, you should have a pretty good idea of which oil and gas accounting software packages will work best for you.

10. Contact references for the software. Talk to a few of the clients in your area, similar to your profile or who use the same product to get an idea of what life is really like with the software.

After this step, you should be ready to take that next step with whichever software provider you’ve decided on. You’ve down your homework and all your research – so making the final decision should come easy.

Well Profits software tracks investments for royalty owners, investors

If you are an investor in oil and gas wells or a royalty owner that receives 8/8ths payments from operators – then you likely need a way to track all those investments and see how well your money is performing.

wellprofit_logoOur newest product, Well Profits, does exactly that. It’s an easy-to-use software product that allows you to track your investments and make real-time decisions based on profit and loss.

wellprofit_logoThroughout the rest of this month, I’ll be sharing a little bit more about how Well Profits works through a brief video demonstration, a podcast interview with the developer on how it was created and maybe even a little statistics from our investors.

First though – let’s see how simple we’ve made tracking your investments.

We’ve outlined it in three steps.

Step 1: Enter receipts

When you receive a check for production from an operator for the interests you have wells in, you’ll enter them into our software line by line, to give you the most detail to track and report on.

Step 2: Enter bills

When you receive an invoice for the expenses the wells you have an interest in have incurred, you’ll enter all the detail that you have on the invoice directly into the software.

Each line of expense will be entered individually, keeping a running total at the bottom of the screen until the entire bill has been added. Using expense codes and expense descriptions you’ll have already created when setting up the software, as well as vendor terms and due dates, entering your data just became a breeze.

Step 3: View Reports

Once all your data you’ve been sent for each well has been entered, you can create robust reports and graphs to see how well they’ve performed. With more than 20 pre-created reports already built into the system and the ability to design your own reports – the sky is the limit on what kind of reports you can run.

Visit our website at wellprofits.sherware.com to see more information on how the software works.

You can request a demo of the software, watch a brief introductory video or download an info packet.


Source: SherWare Blog

Texans given updated rules for well construction after Rule 13 amended

As a shout-out to all of our oil and gas friends and clients in Texas, I’m posting this public service announcement reminding everyone that new amendments to Statewide Rule 13 regarding well construction requirements are now in effect as of January 1.

The Texas Railroad Commission, who oversees the activities of the oil and gas industry, as well as other industries, passed the amendments last May in an effort to update and give clarity to operators regarding oil and gas well construction requirements related to casing, drilling, cementing, etc.

RRC-logo

According to the Railroad Commission’s press release, “Texas is blessed with an abundance of natural resources, including several prolific shale plays that will continue to fuel an unprecedented growth of exploration and production. It is vital that as the state’s top energy regulator, we update and enhance our rules to continue our agency’s proud legacy of environmental protection and public safety,” said Commissioner David Porter.

A few of the amendments include:

– For wells undergoing hydraulic fracturing treatments, operators are required to pressure test well casings to the maximum pressure expected during the fracture treatment and notify the Commission of a failed test.
– Operators are required to isolate (place cement behind casing) across and above all formations that have a permit for an injection or disposal well within one-quarter mile of a proposed well.
– Operators are required to use air, fresh water or fresh water-based drilling mud until surface casing is set and cemented in a well to protect usable quality groundwater.

To read all of the amendments now in effect see the Texas Railroad Commission website.

For those whom these amendments will affect, what’s the impact? How much was changed and how it will affect your business for good or bad?


Source: SherWare Blog

Industry faces more governmental red tape to drill on public lands

Not surprisingly, the oil and gas industry and Obama’s Administration find themselves at odds regarding offshore leases and opening up more public lands for drilling. A common complaint since the Deepwater Horizon disaster in April 2010 has been that the Interior Department has been purposefully either blocking domestic oil and gas production through lease rejections or through approving them so slowly to make them not worth pursuing.

Recently the Obama Administration came out with a new claim to deflect the industry’s complaints elsewhere by claiming that U.S. oil and gas producers are sitting on millions of acres of idle government land leases.

Secretary of the Interior Ken Salazar says that if producers really are sincere about wanting to increase energy production domestically, that they would activate millions of acres of public land already lease to them. A report released by the Department of the Interior claims that of the 36 million acres leased offshore for oil and gas production, 72 percent sit idle.

The industry claims the accusations are “absurd and willfully misleading.”

Jack Gerard, American Petroleum Institute CEO says just because a lease doesn’t fit the government’s definition of active doesn’t mean it’s idle. With only 30 to 40 percent success rate in finding oil, many factors could affect why a lease is idle:

– With a low success rate, a producer has to narrow down its leases to find the lease good enough to drill on

– The lease may be currently uneconomic to extract – take the Bakken fields for example – up until 5 years ago most of those leases now producing millions of barrels of oil a day were sitting idle because the technology was invented yet to blast through those fields.

– Governmental red tape and delays could take up 19 years from the time it takes to prospect, drill and wait for government approvals – during which part of that wait the government considers the lease to be idle, says Kathleen Sgamma, vice president of government and public affairs for the Western Energy Alliance. Sgamma also contends the government can move energy projects like the offshore and domestic leases through more aggressively if it wanted to because that is exactly what it has done with wind and solar projects.

“It’s only politics that accounts for the different treatment accorded oil and gas,” Sgmama said.

Erik Milito, API director of upstream and industry operations claims the government is fallacy: ‘We don’t have to open up any more public land to you, because you’re not using the leases you’ve already got’–is the belief “that you just put a pipe in the ground, and you’re ready to go–that there’s always oil there.”

The Interior’s reaction to API’s explanation: “The report speaks for itself. The notion that we have somehow locked up federal lands clearly doesn’t square with the facts. Our goal is to continue expanding safe and responsible development and we will continue to take steps to deliver on that priority.”

You can check out the government’s full report on the idle leases here.

What has your experience been with drilling on public lands? What red tape have you run into?


Source: SherWare Blog

Could Energy Independence be around the corner?

Energy independence for the United States could be just over a decade away – according to energy experts and analysts. While energy independence has been a touting point for Presidents coming into office since Richard Nixon in the 1970s, few have done much to help accomplish it.

Phillip Verleger, a respected and accurate economist, argues that by 2023, the United States will be energy independent in the sense that the country will export more energy than it imports. This change in the energy equation could lead to America having access to energy supplies at a much lower cost than other parts of the world.

Thanks to changes in technology for horizontal drilling and hydraulic fracturing, the United States is estimated to have enough gas to sustain today’s rate of production for more than a century. This translates across the country, in places that were otherwise once considered stagnant, into economic growth, new jobs and rigs popping up across the country in new discoveries in the Bakken fields and Utica shale.

When President Nixon began “Project Independence” in reaction to the OPEC oil embargo in 1973, the goal was to “achieve energy self-sufficiency for the United States by 1980 through a national commitment to energy conservation and a development of alternative sources of energy.”

Today it’s the same scenario and goals, but we’re actually much closer to achieving it. In the 1970s after the 1973 oil crisis, the United States was importing nearly half of its petroleum needs at insanely high prices and it was widely believed that the country was nearly out of natural gas. Fast forward to now. The US Energy Information Administration estimates that by the end of the decade, half of the crude oil America consumes will be produced domestically and 82 percent will come from the U.S. side of the Atlantic.

In a report released earlier this summer by Citigroup analysts, the United States is the world’s fastest-growing oil and natural gas producer. Including the output from Canada and Mexico, North American is the “new Middle East.” Similarly, energy billionaire and no stranger in this industry, T. Boone Pickens, predicts the United States can at least end oil imports from OPEC countries through new drilling and by shifting diesel-consuming vehicles to natural gas. All other oil needs should come from politically stable allies such as Canada, Pickens adds.

Even if the country were to end its imports from OPEC countries, as a country with vested interests in the Middle East still – regarding Israel and keeping nuclear weapons and technology from spreading, it is still susceptible to big influxes in the state of the Middle East. That coupled with the countries growing unease with hydraulic fracturing and the debate of contaminating water supplies seems to be some of the only hurdles yet to cross.

What else do you foresee happening before the country reaches energy independence?


Source: SherWare Blog

Will U.S. soon reach natural gas storage capacity?

If forecasters are correct, the United States should run out of natural gas storage space by October – a short 5 months away. Thanks to the natural gas rush on the Eastern coast in the Marcellus shale, an unseasonably warm winter – and a mild summer predicted, there’s little chance for producers to unload some of that glut without further dropping the already low price of natural gas in the market.

A few weeks ago the Wall Street Journal ran an article predicting this gas storage problem. Chesapeake Energy has already determined it will be curbing production, (Big surprise move, right? thanks to Aubrey McClendon), following a trend producers are seeing across the country with natural gas drilling rig counts down nearly 20 percent already this year.

According to the Department of Energy, 120 gas storage operators maintain about 400 underground facilities made up of aquifers, depleted oil and gas reservoirs and salt caverns with a working gas capacity of nearly 4 trillion cubic feet. These storage facilities are mostly heavily concentrated near major eastern and mid-America markets, with some in Texas, Oklahoma, California, Colorado and surrounding areas.

Not only are we running out of space to store the gas glut, but nearly 25 percent of the existing pipelines used to deliver gas across the country are more than 50 years old. In 2004, it was projected that nearly $19 billion of investment would be needed to replace the current pipe simply to maintain existing capacity. That was before the Marcellus shale became a household name. Nearly $42 billion was estimated to be needed for new pipeline and storage projects on top of that.

Naysayers argue that the U.S. will never actually run out of natural gas storage, and data – while slightly outdated from the U.S. Energy Information Administration suggests that to be true. According to whom you talk to, and more importantly, what numbers and equations you use, you can get entirely different numbers for what “percent” full we are today. Back in 2003, with the data the U.S. Department of Energy used, that percentage ranged from 79 to 95 percent full with calculations differing based on the equation, not numbers used.

So which is it? Are forecasters merely presenting a doomsday approach to the natural gas market, much like we producers already see and feel? Or is there something to the idea that the market will soon be so saturated that space will run out?


Source: SherWare Blog

New technology may change fracking debate

New technology may change the face of hydraulic fracturing – and it couldn’t come at a better time. Amidst heated debates across the country regarding hydraulic fracturing, waterless hydraulic fracturing claims to offer oil and gas companies an alternative to traditional hydraulic fracturing that is environmentally friendly and cost-effective.

GasFrac, a Calgary-based company, is paving the way with a technique to fracture wells using LPG, short for liquid petroleum gas. LPG uses a mixture of propane that’s pressurized to make a gel. This gel is then injected into the rock formations like traditional hydraulic fracturing is done to break apart the shale and allow the trapped oil and gas below the earth to surface.

The benefits of using LPG is that instead of using millions of gallons of water to break apart the shale, which then have to return to the surface including the small percentage of chemicals added to boost the productivity, the propane will revert to a vapor while underground, which can then be collected when it comes to the surface.

While GasFrac is reported to charge a high premium for its services – something close to 50 percent – producers who have used the technology in states such as Texas, Colorado and Canada say it is worth it based on the money saved from not having to purchase, transport and truck all the water needed to fracture the wells, and then by not having to dispose of all the chemically-laden flow back water that returns to the surface once a well has been fracked.

By the end of the month, two test wells in northern Ohio in the Utica Shale are expected to be drilled and fractured using LPG, as some producers aren’t convinced water is necessary to extract from the Utica Shale.

The technique could also prove to be a boon for drillers in Tioga County, New York, where a moratorium has been in effect on hydraulic fracturing since 2010. A planned drilling site is expected to use LPG to fracture the well.

But, like anything else in the oil and gas industry, these new technology is not met without opposition from environmentalists who claim that while it may stop potential water pollution, it will instead create a greater threat with a high risk of explosions.

More than 1,200 wells have been drilled with GasFrac since its introduction to the oil and gas world with favorable results. With the rest of the country watching to see how these wells on out on the East Coast, it could soon turn this debate on a head.

What do you think of LPG technology? Would it benefit your company and be cost-effective and more safe for the environment?


Source: SherWare Blog