Author: Valor

For oil and gas companies, managing revenue accounting can be a complex and time-consuming task. From tracking production and sales to calculating royalties and taxes, there are many aspects of revenue accounting that require expertise and attention to detail. That’s why many oil and gas companies and individuals are turning to outsourcing as a solution for their specialty asset management accounting needs. In this blog post, we’ll explore some of the benefits of outsourcing your Joint Interest Billing (JIB) and revenue accounting in the oil and gas industry.

1. 1. Cost Savings: By outsourcing your job and revenue accounting, you can reduce your overhead costs significantly. You won’t have to invest in expensive accounting software or hire a full-time team of accountants. Instead, you can rely on a third-party provider to handle your accounting needs without these additional costs.
3. 2. Expertise: Outsourcing your accounting functions allows you to tap into the expertise of experienced professionals who specialize in oil and gas accounting. These professionals have in-depth knowledge of the industry’s unique accounting standards, regulations, and requirements. They can provide accurate and timely financial reporting, minimize errors, and ensure compliance with regulatory bodies.
5. 3. Scalability: One of the benefits of outsourcing your accounting functions is that you can scale your services up or down as your needs change. If you’re experiencing rapid growth, you can quickly and easily increase your accounting support to keep up with demand. Conversely, if you’re experiencing a slowdown, you can reduce your accounting support to save costs.
7. 4. Improved Efficiency: Outsourcing your oil and gas accounting functions can help you streamline your processes and improve efficiency. Your team can eliminate the need for manual data entry and reduce the risk of errors when there is too much work to keep up with. This can free up your internal resources to focus on other areas of your business.
9. 5. Access to Technology: By outsourcing your accounting functions, you can gain access to the latest accounting software and technology your provider might utilize. You can also benefit from advanced analytics tools that can help you make more informed business decisions.

In conclusion, outsourcing your JIB and accounting in the oil and gas industry can provide a range of benefits, including cost savings, expertise, scalability, improved efficiency, and access to technology. By partnering with a reputable and experienced third-party provider such as Valor, you can ensure that your accounting needs are met with accuracy, efficiency, and compliance. Contact us today to learn more about our outsourcing services and solutions.

The information provided by Valor in this blog is for general informational purposes only, not to provide specific recommendations or legal or tax-related advice. The blog/website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

Ad valorem taxes are a type of tax that is levied on the value of a product or property. This tax is calculated as a percentage of the assessed value of the item being taxed. Ad valorem taxes are commonly used to raise revenue for local governments and are typically based on the value of real estate, personal property, or other assets.

One area where ad valorem taxes can have a significant impact is in the mineral industry. Minerals are often subject to ad valorem taxes, which can affect both the mineral owners and the companies that extract these resources from the ground.

For mineral owners, ad valorem taxes can have both positive and negative impacts. On the one hand, these taxes can provide a source of revenue for local governments, which can help fund essential services such as schools, hospitals, and infrastructure. This can be especially beneficial for mineral owners who live in areas where mineral extraction is a major source of economic activity.

However, ad valorem taxes can also be a significant expense for mineral owners. In some cases, these taxes can account for a significant portion of the value of the minerals being extracted. This can make it more difficult for mineral owners to profit from their resources, particularly if the price of the minerals is low or if extraction costs are high.

For companies that extract minerals, ad valorem taxes can also have significant implications. These taxes can increase the cost of mineral extraction, which can affect the profitability of the company. This can be especially true in areas where ad valorem taxes are high or where the value of the minerals being extracted is relatively low.

In some cases, companies may choose to pass on the cost of ad valorem taxes to mineral owners by reducing the price paid for the minerals. This can further impact the profitability of mineral owners, particularly if they are already facing high extraction costs or low mineral prices.

It is important for mineral owners and companies alike to understand the impact that these taxes can have on their operations and to plan accordingly.

Valor is uniquely positioned to assist mineral owners in managing and understanding the intricacies of ad valorem taxes, which are levied on mineral properties based on their assessed value. Our team includes seasoned professionals with years of experience in navigating these nuanced taxes, ensuring that our clients’ financial obligations are met accurately and efficiently. By partnering with Valor, mineral owners can benefit from our expert handling of tax assessments, filings, and disputes, thereby avoiding common pitfalls such as overpayment or non-compliance. Our proactive approach not only safeguards owners against potential legal issues but also optimizes their tax positions to enhance the profitability of their investments. Let Valor take the complexity out of ad valorem taxes so you can enjoy the full benefits of your mineral rights without the burden of tax management.

Contact Valor Today

Contact us today if you need support managing your minerals.

The information provided by Valor in this blog is for general informational purposes only, not to provide specific recommendations or legal or tax-related advice. The blog/website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

Oil is an integral part of our daily lives, however, getting the end products we use on a daily basis doesn’t happen overnight.

Here we take a look at the life cycle of a barrel of oil. From underground reservoirs to refineries to the products we use daily, oil is a key component in making up the details of our lives.

Understanding Joint Interest Billing (JIB) in Oil and Gas Accounting

Joint Interest Billing (JIB) is an accounting system that is unique to the oil and gas industry. Due to the complex nature of this industry, it’s common for multiple parties to invest in a single drilling project. Each shareholder in the joint venture has distinct privileges and obligations. A JIB statement is used to allocate the expenses and revenue from a drilling project among the partners based on the terms of their agreement.

A joint operating agreement (JOA) is an agreement between two or more parties that outlines the terms for the exploration, development, and operation of an oil and gas property. Additionally, it outlines the responsibilities of each party. One of these outlined responsibilities is for the Operator to issue monthly JIB statements. Non-operators receive a percentage of the profit based on their investment.

As you can imagine, JIB accounting is a complex process, and in most cases, operators often have a specialized accountant(s) on their team to manage it. JIB statements can be several pages long and must be mailed to all working interest partners. It takes extreme attention to detail to review, print, and mail JIBS to their rightful partners.

Why Joint Interest Billing is Essential in the Oil and Gas Sector

JIB is not just about allocating costs and revenues; it’s about ensuring financial accuracy and transparency among multiple stakeholders. In the dynamic landscape of oil and gas operations, JIB helps in:

• Efficient Cost Allocation: Ensuring each partner pays their fair share of operational costs.
• Revenue Distribution: Accurately distributing revenues based on the terms of the joint operating agreement (JOA).
• Regulatory Compliance: Adhering to industry-specific financial regulations and standards.

Many operators have chosen to outsource their JIB and revenue accounting given the timeliness and sheer volume of work. Valor provides oil and gas accounting and JIB and Revenue Services. We provide full-service JIB accounting, AFE accounting, oil and gas bookkeeping, accounts payable and joint interest billing, and financial, operational, and production accounting.

Our primary goal is to save our clients time and money. If you are looking to outsource your JIB accounting, contact us today. Valor specializes in Mineral Management and Oil and Gas Back-Office Accounting Services.

The information provided by Valor in this blog is for general informational purposes only, not to provide specific recommendations or legal or tax-related advice. The blog/website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

If you own mineral rights, you know the importance of efficiently managing your assets. The oil and gas industry can be complex and time-consuming, and without proper organization, it can be easy to miss out on valuable opportunities. That’s where a mineral management platform comes in.

Here are some of the benefits of using an oil and gas royalty management software to increase efficiencies and prepare your assets for generations to come:

1. 1. Streamlined Data Management: A mineral management platform centralizes all of your asset’s associated data, providing easy access to information about your mineral rights, lease agreements, production data, and more. This allows you to easily track your assets and make informed decisions based on accurate data.
2. 2. Improved Lease Management: With a mineral management platform, you can easily manage all of your leases, including lease terms, payments, and production reports. This ensures that you are getting the maximum return on your investment and helps you avoid any costly mistakes.
3. 3. Accurate Reporting: Oil and gas royalty management softwares generate accurate reports, which can be easily customized to fit your needs. This helps you track your revenue and expenses, stay up-to-date on production, and ensure compliance with regulations. Valor’s software allows for the following customized reports:
   • – Deposit Report
   • – Interest Revenue Report 
   • – Payor Revenue Report
   • – 1099 Analysis
   • – Property Tax Report
   • – Missing Revenue Report
   • – Wells Not in Pay Report 
4. 4. Simplified Accounting: A mineral management platform automates accounting processes, such as revenue and expense tracking, payment processing, and owner distributions. This frees up your time to focus on other aspects of your business.
5. 5. Future-Proofing: A mineral management platform ensures that your assets are well-organized and easily accessible for generations to come. This provides peace of mind knowing that your heirs will be able to manage your mineral rights with ease.

In conclusion, mineral rights management can become much easier when using software like Valor’s mineral.tech®. These mineral management platforms can help streamline your data management, improve lease management, provide accurate reporting, simplify accounting, and future-proof your assets. With these benefits, you can save time and energy while maximizing the value of your mineral rights.

The information provided by Valor in this blog is for general informational purposes only, not to provide specific recommendations or legal or tax-related advice. The blog/website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

If you’re a mineral or royalty owner, tax preparation can be a complex and challenging process. But with the right strategies and team in place, you can make tax season much easier to manage. In this blog post, we’ll provide some tax preparation tips for mineral and royalty owners, and discuss how partnering with a company such as Valor can help streamline the process.

1. 1. Keep thorough records: The key to successful tax preparation is keeping accurate and detailed records of all your mineral and royalty activities. This includes records of lease agreements, royalty payments, and any deductions you’ve taken over the year. It’s important to keep both physical and digital copies of these records, and to organize them in a way that’s easy to access and understand.
2. 2. Understand your deductions: As a mineral or royalty owner, there are many deductions you may be eligible for. These can include expenses related to drilling and exploration, property taxes, and depreciation of equipment. Be sure to understand which deductions you qualify for and keep accurate records of these expenses throughout the year.
3. 3. Work with a tax professional: Tax laws can be complex and ever-changing, so it’s important to work with a tax professional who has experience working with mineral and royalty owners. They can help you understand the tax implications of your mineral and royalty activities and ensure you’re taking advantage of all the deductions available to you.
4. 4. Utilize a mineral management team and their software: Mineral management softwares, such as mineral.tech®, can be an invaluable tool for tax preparation. mineral.tech® allows our team to organize your records associated with all your mineral assets. They can also provide valuable insights into your mineral and royalty activities, helping you make informed decisions about your portfolio.
5. 5. Plan ahead: Finally, it’s important to plan ahead for tax season. By keeping accurate records, understanding your deductions, working with a tax professional, and using Valor’s expertise and mineral management solutions, you can minimize the stress and complexity of tax preparation. And by planning ahead and starting early, you can ensure that you have all the information you need to file your taxes accurately and on time.

In conclusion, tax preparation can be a daunting task for mineral and royalty owners, but with the right tools and strategies in place, it can be much more manageable.

The information provided by Valor in this blog is for general informational purposes only, not to provide specific recommendations or legal or tax-related advice. The blog/website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

Oil and gas assets are complicated. Not just when it comes to managing them, but also understanding all the associated verbiage and acronyms that come with them. Here we provide a breakdown of ten of the most commonly used terms in oil and gas accounting.

1. 1. Royalty Interest: A share of production or revenue paid to the mineral owner or government.
2. 2. Working Interest: The percentage of ownership in a well or lease.
3. 3. Net Revenue Interest (NRI): The percentage of revenue received from the sale of oil and gas after royalty payments and other expenses.
4. 4. Lease Operating Expense (LOE): The expenses incurred in operating a well, such as labor, equipment, maintenance, and repairs.
5. 5. Severance Tax: A tax imposed on the extraction of non-renewable natural resources.
6. 6. Depletion: The reduction in the value of an asset over time due to extraction or use.
7. 7. Production Sharing Agreement (PSA): An agreement between a company and a government that specifies the terms of sharing profits from oil and gas production.
8. 8. Joint Operating Agreement (JOA): An agreement between two or more parties that outlines the terms and responsibilities for the exploration, development, and operation of an oil and gas property.
9. 9. Asset Retirement Obligation (ARO): The estimated cost of dismantling, removing, and restoring an oil and gas asset at the end of its useful life.
10. 10. Reserves: The estimated amount of oil and gas that can be recovered from a property.

Understanding the nuances of oil and gas accounting is crucial for asset owners to truly grasp how their investments are being managed and optimized. Without a basic knowledge of key accounting terms and practices, owners may find themselves in a vulnerable position, potentially unaware of the financial strategies and decisions being implemented on their assets’ behalf. This lack of understanding can lead to missed opportunities for maximizing returns or, worse, financial discrepancies. Partnering with Valor alleviates these concerns by putting your assets in the hands of seasoned professionals. Our experts handle all aspects of oil and gas accounting, allowing you to focus on other priorities without the need to become an expert in the complex financial landscape of the oil and gas industry. With Valor, you can trust that your assets are managed with expertise and strategic insight, ensuring their best performance and your peace of mind.

Contact Valor Today

Contact us today if you need support with oil and gas accounting.

The information provided by Valor in this blog is for general informational purposes only, not to provide specific recommendations or legal or tax-related advice. The blog/website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

Mineral management doesn’t have to be a messy, time-consuming process. But if you’re not using the right tools for the job, that’s exactly what it will be.

Mineral resource management can be a complicated and time-consuming ordeal. Regardless of where you are in the process — whether you’re learning more about surface rights vs. mineral rights or you’re working on optimizing existing leases — there is always more to do if you want to get the most out of your mineral assets.

Mineral management is not a matter of simply securing leases and then waiting for the money to roll in. Even if you’re not interested in expanding your portfolio, you still need to continuously monitor your properties, check that you aren’t owed any unpaid or escheated funds, and ensure that your accounts haven’t gone into suspension.

It’s critical to have an accurate, updated, and organized inventory of all your assets. However, people spend so much time trying to do this by themselves that they miss errors and opportunities for payment, among other things. Thankfully, technology can make management easier. There is a platform you can use to help you manage your mineral rights and make the most of what you have.

Choosing the Right Mineral Management Platform

Other mineral management solutions might not necessarily have everything you need to maintain an accurate inventory and optimize your mineral rights. But mineral.tech® is different. It was developed by oil and gas professionals in mineral management who sought to solve an industry shortcoming using technology, not technology professionals who sought to solve oil and gas deficiencies.

This platform was designed to truly meet all the needs of asset owners, and it’s also backed by a company with a commitment to accuracy that is second to none. Whether you’re dealing with six or 60 leases, Valor’s platform offers a way to manage your mineral rights with software that is constantly being updated and optimized. Combined with our team of experts, we can efficiently flag errors and optimize assets and opportunities.

To understand how mineral.tech® can assist you with your assets, let’s take a look at what the solution has to offer.

What Comprehensive Mineral Management Looks Like

In order to properly cultivate your assets, you first need to start with a solid foundation. Valor understands this, which is why you first need to go through our thorough onboarding process.

Valor will begin by setting up your portal and building a complete list of your assets. This list includes input API’s, property descriptions, and other relevant data that make your assets easy to organize and manage. Your leases are then set up and mapped out along with your wells. Finally, all historical files — including deeds and division orders — are digitally scanned in to give you a complete picture of where you stand.

Once everything is set up, you can then rely on mineral.tech® and our team’s expertise and attention to detail to yield strong outcomes. With the help of mineral.tech® and Valor’s experts, we upload your monthly checks, map new wells using division orders, set up new leases, and run pay status review reports to make sure you receive payments in a timely manner.

We also make it a best practice to dig deeper, using mineral.tech® to recover escheated funds and look for missing leases and source documents. Because we offer a continuous review of your properties — along with regular maintenance, reporting, and optimization — you can be sure the information you’re working with is accurate and up to date. With mineral.tech®, you no longer have to worry about discovering that your account is in suspense months after it happened.

At Valor, mineral.tech® and our accounting team allows us to deliver the following services:

• • Financial distributions to various accounts within a family’s client portfolio
• • 1099 and property tax entry, analysis, and reporting through mineral.tech®
• • Annual reporting on income and expenses by state and product type
• • Detailed revenue and expense accounting at the well and lease level
• • Quality control for errors, underpayments, and missed payments
• • Joint interest billing, review, and payments
• • Ad valorem tax administration and payment
• • Suspended and escheated funds assistance
• • Well proposal and AFE analysis
• • UPIA depletion calculation

Take Advantage of mineral.tech® Today

Mineral management doesn’t have to be a messy, time-consuming process. But if you’re not using the right tools for the job, that’s exactly what it will be.

The beauty of relying on Valor and mineral.tech® is that it allows individuals and organizations to focus on their core competencies and not spend their days bogged down in the details. With Valor and mineral.tech® at your side, you can make the most of your assets without letting them eat up all your time.

Want to learn more? Reach out today to get started.

The information provided by Valor in this blog is for general informational purposes only, not to provide specific recommendations or legal or tax-related advice. The blog/website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

Oil and gas back-office solutions can be one of the most challenging aspects of an operator’s business. Not only is it time-consuming, but it can also be difficult to manage, especially when resources are limited. Outsourcing your back office services can provide a number of benefits, such as greater efficiency, cost savings, and improved client relations.

1. 1. Saves You Time
2. Time is a valuable resource for any business, and when it comes to oil and gas operations, it’s essential that all operations are managed in an efficient and cost-effective manner. By outsourcing your back office services to a reliable third party such as Valor, you can save your own team significant amounts of time. Back-office services require specialized knowledge and expertise and can take up a lot of resources if done in-house. Outsourcing these processes to a trusted partner allows you to free up your team to focus on more important tasks while ensuring that all of your back-office operations are handled accurately and efficiently. Moreover, outsourcing eliminates the need to recruit and train additional staff to manage back-office operations, which would further reduce the amount of time that you spend on administrative tasks.
3. 2. Increased Operational Efficiencies
4. One of the biggest benefits of back-office outsourcing is that it can dramatically improve operational efficiency. By outsourcing activities to a specialized vendor, oil and gas operators can free up their own internal resources to focus on what they do best. This can reduce the amount of time spent on mundane tasks like JIBs, division orders, oil and gas accounting, and owner relations, allowing the operator to reallocate resources toward more strategic activities. Additionally, outsourcing allows operators to access the latest technology and processes from experienced third parties, which can help them streamline operations and boost productivity.
5. 3. Agile Operations
6. One of the primary benefits of back-office outsourcing is that it reduces the mandated costs and staffing associated with maintaining an in-house back office. By outsourcing to a third-party provider, oil and gas operators can benefit from economies of scale, and eliminate the need to hire additional staff. Additionally, outsourcing reduces the need for overhead expenses related to office space, employee benefits, hardware, software, and other IT resources. Ultimately, by outsourcing their back office services, oil and gas operators can better manage and forecast their costs, while still maintaining excellent output.
7. 4. Improved Decision Making
8. Back-office outsourcing can be a great way to improve decision-making for oil and gas operators. When operators outsource their back-office operations, they are able to access experienced professionals that understand the complexities of the oil and gas industry. With this expert insight, operators can make better decisions on financial, operational and strategic matters. Outsourcing also helps streamline decision-making processes by providing oil and gas operators with access to data and analytics that are not easily available in-house. This ensures that decisions are made more quickly and accurately, allowing operators to better respond to changes in the market and position themselves for success.
9. 5. Increased Focus on Core Operations
10. Back-office outsourcing provides the opportunity for oil and gas operators to focus on their core operations. By outsourcing certain tasks and processes, operators can streamline their operations and ensure that only their most important tasks are taking up their valuable time. As a result, operators can prioritize their core competencies in order to achieve better results and performance.
11. Outsourcing back-office tasks allows operators to devote their resources and efforts to the areas where they have the highest expertise. This increased focus on their core operations allows them to maximize the value of the services they offer. This can help them increase their productivity, reduce costs, and ultimately make more money.

Are you looking to outsource your back-office services? Contact us today.

The information provided by Valor in this blog is for general informational purposes only, not to provide specific recommendations or legal or tax-related advice. The blog/website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

A mineral rights lease is a contractual agreement in which a mineral rights holder grants another party the right to explore, drill, develop, and produce a mineral asset on a parcel of land for a period of time. It’s critical for mineral rights holders to understand the terms of a mineral lease agreement before negotiating and ensure that it provides adequate legal protection for its duration.

Mineral rights come with some lucrative advantages. But for the average rights holder, those advantages rarely involve personally extracting the minerals. After making the capital investments necessary to explore and develop deposits, it becomes less profitable than other alternatives. As a result, many rights holders consider leasing mineral rights to another party via a mineral lease agreement.

As the term might suggest, a mineral lease is a contractual agreement in which a mineral rights holder grants another party the right to explore, drill, develop, and produce a mineral asset on a parcel of land for a period of time. For example, an oil and gas company may want to enter into a mineral lease agreement in hopes of extracting oil or gas from below the property — in exchange for royalty payments, of course.

Examining Mineral Lease Agreement Terms

It’s critical for rights holders to understand the terms of a mineral lease agreement before signing and ensure that it provides adequate legal protection for its duration. Otherwise, it could spell trouble down the line.

Here is a short glossary of terms to review:

• Granting clause. The granting clause details the rights granted to the other party. It can include which specific activities are permitted, such as exploring by geophysical, geologic, and seismic methods; placing and storing equipment on the property; or transporting assets by way of pipelines.

• Term limits. Typically, there are two parts to a term clause: primary and secondary terms. Primary terms range from three to five years, while secondary terms last as long as the oil and/or gas well is producing, which often grants mining companies the right to continue drilling and extracting assets for many years.

• Royalty percentage. It isn’t uncommon for parties to subtract fees from royalty payouts, reducing the amount of income holders earn from their mineral rights. Depending on the mineral leasing act regulations of the area, holders could also be subject to additional taxes.

• Surface protection. Surface protection guarantees compensation to the holder should the other party alter or disrupt the land or other things on it, including homes, crops, fences/gates or water. If this isn’t specified in the lease, the holder could be on the line for additional costs.

However, knowing what could be included in a mineral lease agreement is just half the battle. There’s also the matter of negotiating with the other party to ensure the lease is mutually beneficial.

Negotiating Better Terms When Leasing Mineral Rights

In addition to learning about what a lease entails, mineral rights holders should research the interested party to determine if they are a good fit. After all, the mineral extraction process could present risks to the property or assets. Forming a mutually beneficial agreement with a fair party will make navigating potential roadblocks easier.

Consulting with an attorney who’s well-versed in mineral lease agreements is key, and the same can be said for enlisting the help of a third party to manage the process of leasing mineral rights. It’s essential to verify what’s being said against what’s been put in writing. Without proper precautions, an oil and gas company could take advantage of someone’s goal of securing another source of income through a mineral lease agreement. No one wants to end up with a deal that isn’t as profitable as it could be.

Matt Autry, President of Oil and Gas at Valor, possesses 15 years of oil and gas industry experience that ranges from working as a landman to owning and managing minerals. Matt’s primary focus has been on the land management side of business, including mergers, trades, acquisitions and divestitures in Texas, New Mexico, Oklahoma, and North Dakota.

The information provided by Valor in this blog is for general informational purposes only, not to provide specific recommendations or legal or tax-related advice. The blog/website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.