The oil and gas industry is becoming a competitive and expensive ecosystem. In this time, it’s crucial to know exactly where your money is going in a joint operating agreement. If you have any concerns that your capital may be misallocated by an operator within this agreement, it might be time to consider conducting a joint interest audit (JIA).
Taking the steps to verify where your money is being spent and whether it is being spent appropriately within joint operating agreements (JOA) is well worth your while. Coding errors with budget spending, such as cost overcharges, or with licenses often occur. These issues can result in significant losses if they’re not thoroughly investigated. If you are a non-operator, conducting a JIA will let you verify costs charged to you and resolve errors. This could result in you potentially recovering hundreds of thousands, if not millions of dollars.
It may sound like conducting a joint interest audit is the obvious step forward to keeping your assets organized and having a deeper understanding of where your money is going. However, such a thorough investigation does not come cheap.
Why would businesses choose to not perform a joint interest audit?
One reason why businesses do not choose to perform a JIA is because of the audit’s projected cost. JIAs require a lot of capital, and the cost might seem daunting or not worth the time investment. However, recovered assets usually are worth far beyond the cost of the audit itself. If you have any suspicion of coding errors or bills inappropriately charged to you within the agreement, run a JIA. The cost of a joint interest audit is money well-spent for what you’ll receive in return.
Running an audit is also exceedingly difficult without a dedicated joint interest accounting team that can navigate through COPAS standards and regulations. And that’s in addition to the dozens of agreements that lay the groundwork for joint ventures. This is where our back office at PetroLedger can come in. We have over 30 years of experience conducting JIAs for our clients. Our JIB team is well-equipped to tackle even the most intricate JOAs.
If you are concerned that your money may not be allocated correctly or that you may be missing out on thousands or potentially millions of dollars, PetroLedger can perform a joint interest audit on your behalf and help set your money back on the right path. Interested in conducting a JIA? Call our team or request a call!