Joint Operations, A Way of Sharing Risks & Reward in Petroleum’s E & P Segment

Joint Operations, A Way of Sharing Risks & Reward in Petroleum’s E & P Segment

Instructor: Mr. Jimmy Karnadi

August  28^th – 30^th 2013 – Tentrem Hotel Yogyakarta

 COURSE OBJECTIVES

Operating in oil and gas industries, for sure it is understandable by every body that it involves capital intensive, yet the success ratio in these industries is very low. In an attempt to minimize risks and at the same time to gather the needed capital which the E & P companies should spend, they form Joint Operation to achieve their aims.

To enable to operate, do proper recording and make correct reporting of your company, either as an operator or non operator as the case may be for your company, each of you should know the basic legal form of the Joint Venture Agreement, Joint Operating Agreement, Accounting Procedure and any other matters that your company has entered an agreement into.

Your company may enter into various Joint Venture Agreements, through Farm-outs, Unitization and any other types, which is known as the pooling of capital concept. The pooling of capital concept bring into facts that during the venture period, there are equalization amongst the parties, the operator and non-operator and possibly with the other non-operator. Such equalization can be in the form of cash equalization, disproportionate spending equalization and/or equalization as a result of re-determination of interest.

Through Joint Operation, your company may operate internationally and operate under various different fiscal systems, and even-though that the fiscal system used in Indonesia is the Production Sharing Agreement, it is good for you to know the other type of the fiscal systems for comparison.

By Attending This Course, You will better able To :

• Understand what the Joint Venture, Joint Operating Agreement and its Accounting Exhibit are, and how to apply them in day to day operations
• Notify, that your company working interest percentage, will not always be applied consistently when implementing it against the revenue and when used in splitting the costs
• Differentiate between recording Joint Interest Billing using accrual basis in one hand, but on the other hand when you Cash Call (you are being the Operator) or being Cash Called (you are being the Non-Operator) you are going to do it on a real cash basis
• Not to mix up between your involvement in the Joint Venture Agreement and your involvement as a member of the parties that you and your Operator or your Non Operated Joint Venture partner in dealing with the fiscal systems, e.g Production Sharing Contract agreement 
• Picture better the flow transactions from your Accounts Payable, Accounts Receivable, Warehouse Stock, Payroll, Project and other module(s), which finally processed into Joint Interest Billing by your Joint Venture Section.

COURSE CONTENT

Introduction

·                                 High risks and high costs industry

·                                 Petroleum industry segmentation

Joint Operations

• Legal forms of joint activities
• Joint ventures
• Joint ventures agreements
• Joint operating agreement
• Accounting procedures of JOA
• Material movements
• Joint Interest Billing
• Joint interest audits

Farmouts, Carried Interest and Unitizations

• Farm-outs
• Free wells
• Carried interest
• Promoted versus Promoting
• Unitizations
• Equalizations
• Equalizing pre-unitization costs
• Cash equalization
• Disproportionate spending equalization
• Equalization resulting from re-determination of interest

International Operations

• Economic Rent
• Legal/Regulatory/Contractual Framework
• Risks of international E & P
• Fiscal systems
• Concessions
• Contractual agreements

PARTICIPANT

• Joint Venture Accountant
• General Accounting
• Reporting Accountant
• Revenue Accounting Accountant, Budgeting Accountant
• Supervisors
• Lawyer
• Engineer
• Auditor
• Other professionals who want to learn more and to know more of what the Joint Operation is all about.

DURATION

3 days