🇺🇸United States

Unbilled Shared Costs in JIB Processing

1 verified sources

Definition

Operators fail to bill all joint account charges to working interest owners (non-operators) due to incomplete records or inaccurate tracking against the Joint Operating Agreement (JOA). This results in lost revenue for the operator as allowable shared costs go unbilled. Proper maintenance of records and integration with software is required to capture and bill all charges accurately.

Key Findings

  • Financial Impact: Undisclosed (potential recurring operator losses from unbilled charges)
  • Frequency: Monthly
  • Root Cause: Incomplete or unfaithful maintenance of records, failure to reference original JOA and COPAS procedures during billing preparation

Why This Matters

This pain point represents a significant opportunity for B2B solutions targeting Oil Extraction.

Affected Stakeholders

Oil and Gas Accountants, Operators (Billing Team), Joint Venture Partners

Deep Analysis (Premium)

Financial Impact

$10,000+ monthly in unbilled reservoir expenses • $100K-$750K+ annually (pipeline projects have higher operational costs; shared with 2-5 partners means significant pass-through revenue leakage) • $150K-$800K+ annually (midstream volumes high; 3-10 operating partners per pipeline means significant multiplier effect)

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Current Workarounds

Excel purchase logs reconciled manually with AP system. • Excel-based cost allocation spreadsheets emailed monthly. • Export GL and cost center data to Excel, manually tie to JOAs and COPAS accounting procedures, build partner-share calculations in spreadsheets, and issue off-cycle or manual adjustment JIBs when discrepancies are large enough to justify the effort.

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Methodology & Sources

Data collected via OSINT from regulatory filings, industry audits, and verified case studies.

Evidence Sources:

Related Business Risks

Recurring EPA penalties for inaccurate Clean Water Act discharge reporting

$200,000–$5,000,000 per enforcement action; for large operators, recurring exposure can exceed $1–3 million per year across assets

State air emissions inventory and greenhouse‑gas reporting failures driving fines and mandated retrofits

$100,000–$2,000,000 per consent order; large basins can see multi‑year settlements exceeding $5–10 million including corrective actions

SEC oil & gas reserves and resource extraction payment disclosure misstatements

$5,000,000–$50,000,000 for major restatements and enforcement actions, including legal fees and market‑cap impact from reserve write‑downs; ongoing incremental compliance cost can run $500,000–$2,000,000 per year for large issuers

Excess labor and consulting spend on fragmented regulatory reporting processes

$250,000–$3,000,000 per year for mid‑ to large‑cap operators in incremental internal labor and external advisory fees attributable to inefficient reporting processes

Delayed project approvals and permits due to incomplete or inconsistent regulatory submissions

$1,000,000–$10,000,000 per delayed multi‑well pad when permitting/reporting deficiencies delay production by several months, based on lost net present value of deferred cash flows

Operational slowdowns from compliance‑driven production curtailments and shutdowns

$100,000–$1,000,000+ per incident in lost gross margin for mid‑size fields; enterprise‑wide exposure can reach several million dollars per year when multiple facilities are affected

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