Joint Interest Billing: What is it and Why is it Important to Oil & Gas Operators?

If you have been an oil and gas operator for any length of time, it’s almost a guarantee that you have wells connected to working interest owners. This means you are responsible for tracking and reporting those joint account charges to your interest owners, and that’s where things can get pretty complicated. This is why you need to have a good understanding of Joint Interest Billing (JIB) and the processes that come with it.

That’s where we come in! We’ve written this quick overview to ensure that your JIB accounting is on the right track.

Joint Interest Billing (JIB) 101

In the fast-paced, high-risk, high-reward world of oil and gas, having multiple people/companies invested in your wells and operations is a common practice and a great opportunity for everyone involved to maximize on their investment. These investments and their expenses need to be tracked, and you need to make sure each investor understands the findings each month. This is where JIB accounting comes in, and you’d better be ready to manage a lot of numbers.

Joint interest billing (JIB) lays out the expenses from a drilling project based on an agreement between the operator and non-operator. While these agreements vary, the accounting behind them is all the same. The operator performs all the drilling and receives the initial profit and expenses from that work. From there, in accordance with the agreement, they process JIB statements to send out to each of the interest owners so that they are aware of the expenses they are responsible for.

What Makes JIB Complicated?

Joint ventures can create a number of new obstacles when it comes to keeping up with your books. The process of managing your JIB accounts can be quite daunting for you and your team. JIB statements can easily become pages long depending on how complex an agreement you have with your interest owners.

The more interest owners and partners involved, the more complicated JIB accounting can become. More paperwork, more numbers to crunch, and more chances for an error to be made if you are not 100% certain of what you are doing. Pile that on top of ever-changing regulations, and you could easily have a mess on your hands. And if you are still using paper methods to keep track of it all, the process can quickly become more than overwhelming.

How Can PetroLedger Help?

With over 100 certified bookkeepers, CPAs, and degreed accountants, PetroLedger is prepared to help you organize and manage your JIB accounts and make sure everything is allocated correctly and processed on time.

We are here to optimize your books and get everything streamlined and running smoothly so you can get back to focusing on the bigger picture.

Reach out to us today via email or phone and learn more about how we can help you optimize your JIB workflow!

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