Through the Lens of a Production Accountant (Part III)

Through the Lens of a Production Accountant

This post wraps up our series around the importance of hydrocarbon allocations in upstream oil and gas.

A typical month in the life of a production accountant (PA) – also commonly referred to as a production analyst – involves activities plus analysis of data that span multiple time periods simultaneously. And these activities are more than rote tasks but instead involve support of multiple departments including engineering, revenue, regulatory, and of course, the field.

Production Accountants Wear Many Hats

On a daily basis, PAs support field data gathering efforts to ensure data coming from the field that feeds allocations is as accurate as possible. They will modify route assignments as needed, ensure that SCADA data is integrating with manual capture, and travel to the field to work with existing and new field users to train them on the use of FDC software. They also enforce best practices in managing production measurements that feed hydrocarbon allocations and related systems.

At the same time, they manage new well and pad set ups in their hydrocarbon accounting system, ensuring that allocation scenarios comply with commercial, regulatory, and measurement requirements. If there is a major acquisition, the PA will also be responsible for ensuring that all the information required to process allocations is available and has been correctly integrated from whatever system the acquired wells were in before. 

A production accountant reviews the results of daily production allocations, proactively monitoring for variances, coordinating any required corrections to data, plus communicating between engineers and operations teams when there are questions about suspect or missing data. Common issues that they may need to follow up on are missing run tickets, run tickets with incorrect purchasers, downtime with incorrect codes, variances on a meter reading, overdue well tests, and more.

In the absence of a self-serve production reporting system, PAs may be required to prepare, review, and distribute morning production reports. They will also troubleshoot issues with any of the common hydrocarbon allocation system integration points like economic forecast systems, marketing, revenue, and more.

Discrepancies & Inaccuracies

As soon as daily allocations have been approved for the prior month, the PA will provide the sum of daily allocated data by well or lease to revenue so that they can start their accrual process. Not long after, or as the statements become available throughout the month, the PA will work on reconciling what could be hundreds or thousands of oil run tickets with statements provided by the purchasers. Here, they are looking for discrepancies between what the E&P company’s software calculated for net oil sales and gravity versus what the purchaser says. PAs have been responsible for finding inaccuracies in the millions of dollars associated with this process. Once all the oil sales (trucked and piped) have been accounted for, the PA will process the oil allocations for the prior month.

In a similar process, as statements come in from gas integrators and purchasers for the prior month, the production accountant will compare end-of-month volumes on those statements to what was recorded daily by the field. This is another area where large discrepancies can be found. When done, monthly gas allocations are run. If there are properties that flow into non-operated gas plants, they may be responsible for processing a second set of component allocations based on statements from the tailgate of the plants.

If the PA is responsible for properties that flow into saltwater disposal facilities, they will process allocations of water delivered to those facilities back to the producing wells. And if there is any associated skim oil, they will allocate those volumes too.

Before finalizing the allocations, the PA will check for variances to prior months to ensure that the results for each well is as expected. When done, they will send the final monthly volumes to revenue.

Regulatory Requirements & Prior Period Adjustments

A month later, after all the above has been completed, the production accountant will have the arduous task of preparing and submitting detailed production, sales, lease use, flare, and vented details to each state and federal agency. Because each agency has slightly different rules and formatting requirements for their forms, the PA must be an expert in each agency’s requirements. Depending on how their company is structured, the PA may also be responsible for filing well test, injection, and related forms.

If there are any corrections to be made to previously filed regulatory reports, also known as prior period adjustments (PPAs), the production accountant will work on re-running the necessary allocations and submitting revised filings to the appropriate regulatory agencies. This, of course, will necessitate coordination with revenue to send any PPAs to that department for their processing. 

Critical Data

Depending on their role, the PA may be required to load data provided by partners on wells for which their company has shown interest. And in turn, provide similar data to partners from their wells. 

To be successful in this role, a production accountant or analyst must understand the math behind allocation scenarios and have the necessary tools to generate ad hoc queries for ongoing and one-time needs. A strong comprehension of how production data is used in and throughout every department is necessary as it serves as the central point of communication for key events going on in the field and back office.

Learn more by watching our recent webinar: The Who, What, and Why of Upstream Hydrocarbon Allocations

Related Articles

For Exec-Level Managers and IT Personnel, Communication Hurdles Abound When It Comes To Shift Logs, Shift Handover

In previous blogs , we have examined the communication challenges for operators and supervisors around shift logs and shift handover...

The Problem with Siloed Data in Oil and Gas Reporting

Making informed and quality decisions regarding your upstream oil and gas operation requires timely and accurate data often from different...

The Painful Cost of Non-Integrated Solutions in Upstream Oil and Gas Accounting

One of the biggest challenges facing oil and gas accounting and finance teams is the lack of centralized data –...