Division of Interest

To set up relationships between owners and the wells they have interest in, use the Division of Interests window. This information is entered once for each well. It does not need to be entered again unless the owners change, or their share changes. When this window is first opened, you are viewing a single owner's record for a single well. If you make any changes here, such as overwriting the owner, you have changed that existing owner's record. To add a new owner to a well, click the New Button on the toolbar at the top of the window. It will automatically fill in the current well, but the rest of the window should be blank. To search for a separate existing division of interest for a different well or owner, use the List button on the toolbar - do not use the Well ID or Owner ID buttons, as that will change the existing interest you are viewing.

It is recommended to enter any royalty or override interests into the well first before entering the working interests when setting up a new well's division of interest. This is so that the system can calculate the net revenue interest for your working interest owners more easily. Be sure to enter the interests as whole percentages. For example: 12.5% is entered as 12.5000000. If the royalty owners in the well are unknown, be sure to give the dummy owner a royalty interest in the well for that total royalty percentage.

When entering a royalty or override owner's interest in the well, simply enter their percentage in the Oil or Gas revenue interest class. The system will prompt you to copy this percentage to the appropriate tax interest classes.

When entering a working interest into the well, simply enter their percentage in the Working Interest class shown in the Expenses section, then click Save on the toolbar. The system will automatically calculate the net revenue interest for Oil and Gas revenue and the appropriate tax classes. This will ensure that all revenue interests total 100.

It is important that all interest classes used in the Division of Interest for the well total 100. If the interest class does not total 100, the system will not be able to fully allocate the amounts that are entered using that interest class. For example: if only 87.5% of the Gas Revenue interest class is entered, then the system will only allocate 87.5% of revenue entered using MCF as the revenue type.

If the same owner has multiple interests in the well you can use the same owner ID for all of the interests. All interests will then report on the same statement and check for this individual. If you do not want the various interests within the same well to net togethor then you can setup multiple owner records for this owner and use a different owner ID for each well.

Owner Interests Tab

Contains every interest class available for an owner in a well. To add an owner to a well, you MUST add a new record. If you just change the owner ID on the current record, you have replaced an owner in a well with a different owner.

Well ID
Choose or enter the Well ID of the well for which interests will be set up. Choose from the lookup window by pressing F2 or by clicking the Well ID button.

Don't Automatically Calculate Net Revenue Interests
When enabled, this option allows revenue interests to be maintained separate and apart from the calculated interests in the working interest class. This option should rarely be used, but if enabled, will allow the Gas and Oil revenue interests to be manually input. The net revenue interest is the amount of revenue that the working interest owners receive after all royalty and override owners have received their share of revenue. It is termed net revenue interest because it is revenue interest net of royalty/override interest.

The Disbursement and JIB Manager Integrated Edition, by default, automatically calculates the net revenue interests for the working interest owners based upon the amount of royalty interests in the well and the rate of working interest entered for an individual owner. For example, well W001 has royalty interests of 17.5% entered. Joe Smith is entered as a working interest owner with 25% working interest. The system would calculate Joe's net revenue interest to be (100% - 17.5%) * 25% = 20.625%.

If this option is enabled, you will have to manually enter the correct percentages into the Gas Revenue and Oil Revenue Interest classes. Otherwise, for working interest owners, you would simply enter their working interest percentage, then click save, which will calculate the rest of the revenue and tax interests for you automatically. For royalty owners, you would just need to enter their oil and gas revenue percentages. When you do this, the system will ask you if you want to copy their revenue percentages to the corresponding tax fields. This is recommended and will save data entry time.

Owner ID
Enter the Owner ID of the owner that has a share in this well. Choose from the lookup window by pressing F2 or by clicking on the Owner ID button located beside the owner ID field.

Program Code
If this interest belongs to a defined well program, enter the program code here. The program must already be defined in the Program/Partnership Information window. Choose the program code by pressing F2 or by clicking on the Program button. If you fill this field in, and then create a new record, this field will automatically fill in again with the program that was specified on the record that was showing on the window when the new button was pressed.

Owner Type
Describes what type of owner this is. Choose Working Interest, Royalty or Override.

Interest Type
Specify the type of royalty/override interest by choosing Gas if this royalty owner has only a Gas (MCF) interest. Choose Oil if this royalty owner has only an Oil (BBL) interest. Choose Both if this interest is the same for both Oil and Gas. Working interest owners must be set as Both.

Direct Paid
If the revenue to this interest is paid directly by the purchaser, you can denote that here. If the oil interest is paid directly, choose Oil here. If the gas interest is paid directly, choose Gas here. If both the oil and gas interests are paid directly, choose Both here. If neither gas nor oil interests are paid directly, choose None. Do not choose Direct Paid for your operator's interest within the well.

JIB Int
If this owner is to be billed for the expenses of this well instead of having his expenses netted from the revenue, put a check mark in this box. When this option is on for an owner in a well, the owner will be paid any revenue the well generates and then will be billed separately for his/her share of the expenses. This option is applicable to working interest owners only.

Int On Hold
Check this box to put this interest on hold. When an interest is on hold, the amounts generated by this interest are put into the suspense file until the interest is taken off of hold. When the interest is taken off of hold status, the amounts held are released the next time a revenue run for the group this well is in, is closed. If you want to put the entire owner on hold, and not just this interest, you can do that through the owner information window. Marking this option will apply only to this individual interest and not to all other interests for this owner.

Flat Rate
Check this box if the interest is a flat rate royalty interest. A flat rate interest is paid a flat rate amount either by volume or by month instead of a percentage. The Working Interest owners in the well will be charged for any flat rates allocated to royalty owners. You can not set a "Dummy" owner up with a Flat rate interest. When marked the next few fields will also need to be filled out.

Month Flat Rate Starts
Enter the month the flat rate should start. The system uses the month to calculate when the next quarter, semi-annual or annual payment is due. The checks will be created when the run is closed. It will automatically release any flat rates for the month that the run is closed in if you have the option marked to do so on the run closing window when you close. This field only needs filled out if the Flat Rate option above is also marked.
Flat Freq
Specify how often the flat rate should be paid. The flat rate will be paid at the beginning of the selected period. The flat rate will only be released on a run run closing if the run is closed during a month that it will release in and the option is marked to release flat rates when the run is closed.
Monthly - Owner will receive a check every month.
Quarterly - Owner will receive a check every quarter. A check will be created in January, April, July, and October assuming January is selected as the month the flat rate starts.
Semi-Annually - Owner will receive two checks every year. A check will be created for the owner in January and July assuming January is selected as the month the flat rate starts.
Annually - Owner will receive one check every year in January assuming January is selected as the month the flat rate starts.
Having both an Annual Flat Rate Frequency (Division of Interest Window) for an owner setup with an Annual Disbursement Frequency (Codes tab of the Owner Information Window) will result in 11 month delay before the owner receives teh check. The Flat Rate will be released at the beginning of the term, but since the owner is not set to receive a disbursement check the balance will be held in suspense until the end of the term before it will release the check. Typically it is best to leave the Owner Disbursement Frequency left as Monthly if you will be having a different Flat Rate Frequency. That way it will create a check every time a flat rate is released.
Flat Rate
Enter the royalty owner's flat amount. This amount cannot be entered unless the Flat Rate option has been enabled for this royalty owner. See Flat Rate checkbox above. This field only needs filled out if the Flat Rate option above is also marked.
Rate Per MCF & Rate Per BBL
If the flat rate should be paid as a flat amount based on how much the well produces, you can fill in the amount per barrel and per MCF for those calculations. If these are filled in, the system will take this amount times the total units produced, and pay the flat rate owner that amount. These fields only needs filled out if the Flat Rate option above is also marked.

Oil Revenue
Enter the owner's oil revenue interest in this well. Enter as a whole percentage. For example: 12.5% would be 12.50000. If this is a working interest owner and you want the net revenue interests to be automatically calculated, don't enter this revenue interest.

Gas Revenue
Enter the owner's gas revenue interest in this well. Enter as a whole percentage. For example: 12.5% would be 12.50000. If this is a working interest owner and you want the net revenue interests to be automatically calculated, don't enter this revenue interest.

Other Product Revenue
Enter the owner's other product revenue interest in this well. Enter as a whole percentage. For example: 12.5% would be 12.50000.

Misc Revenue 1
Enter the owner's miscellaneous 1 revenue interest in this well. Enter as a whole percentage. For example: 12.5% would be 12.50000.

Misc Revenue 2
Enter the owner's miscellaneous 2 revenue interest in this well. Enter as a whole percentage. For example: 12.5% would be 12.50000.

Trans Revenue
Enter the owner's transportation revenue interest in this well. Enter as a whole percentage. For example: 12.5% would be 12.50000.

Working Interest
Enter this working interest owner's working interest in this well. Enter as a whole percentage. For example: 12.5% would be 12.50000. This interest is for normal lease operating expenses. Expenses that are in expense class 0 will be charged to this interest class. If this owner is marked as a royalty owner, then this box will be grayed out.

Exp Class 1
Enter this owner's expense class 1 interest in this well. Enter as a whole percentage. For example: 12.5% would be 12.50000. Expenses that are in expense class 1 will be charged to this interest class.

Exp Class 2
Enter this owner's expense class 2 interest in this well. Enter as a whole percentage. For example: 12.5% would be 12.50000. Expenses that are in expense class 2 will be charged to this interest class.

Exp Class 3
Enter this owner's expense class 3 interest in this well. Enter as a whole percentage. For example: 12.5% would be 12.50000. Expenses that are in expense class 3 will be charged to this interest class.

Exp Class 4
Enter this owner's expense class 4 interest in this well. Enter as a whole percentage. For example: 12.5% would be 12.50000. Expenses that are in expense class 4 will be charged to this interest class.

Exp Class 5
Enter this owner's expense class 5 interest in this well. Enter as a whole percentage. For example: 12.5% would be 12.50000. Expenses that are in expense class 5 will be charged to this interest class.

After Payout
Enter the owner's working interest that the owner reverts to after the well has paid out. Enter as a whole percentage. For example: 12.5% would be 12.50000. This interest class is used only to store the After Payout interest for the WI owners. It is not possible to charge expenses to this class during the expense entry or run closing. Once payout has been reached, you may use the Copy DOI utility to copy these interests to the Working Interest class.

Before Casing Point
Enter this owner's expense interest for before casing point expenses. Enter as a whole percentage. For example: 12.5% would be 12.50000. Expenses that are in expense class A will be charged to this interest class.

After Casing Point
Enter this owner's expense interest for after casing point expenses. Enter as a whole percentage. For example: 12.5% would be 12.50000. Expenses that are in expense class B will be charged to this interest class.

Tax 1 - Tax 4
Enter this owner's interest for oil, gas and other product taxes. Enter as a whole percentage. For example: 12.5% would be 12.50000. There are four different tax calculations available for each product. Each of the four tax interests corresponds directly to the four tax rates available to be set up by using the Well Product Tax Table form found under the Maintain menu. If an owner is exempt from tax, do not zero out their interest in these classes; instead, mark the owner as exempt in the Owner Information window.

State Tax W/H Pct
If you need to withhold a state tax for this interest, enter it here. This percentage will be based on the gross revenue (before any deductions) earned for this interest. Enter as a whole percentage. For example: 6.75% would be entered as 6.75. The amount of tax withheld will post to the "Tax Withholding" account specified in the QuickBooks Posting Preferences.
- By default this tax will be calculated based on gross revenue. If you want the State Tax to be withheld based on the net revenue instead of the gross revenue you can create a file called "taxnet.cfg" in the "Datafiles" folder. Then all owners with State withholding on the Division of Interest window will be calculated on the Net instead of the Gross.

Note:
When using the Owner Interests tab, think of it as a book with one page for each owner's interest in a well. To view a different owner or well you will have to use the toolbar to go to the next or previous record. (like flipping pages) If you change the owner's name on this page it will not browse to that owner's record but change this record from the current owner to different one.

Interest Views Tab

This window gives a snapshot of all the owners in a well in a particular interest class. The interest class can be changed by selecting a different one from the drop-down list in the upper right hand corner. Changes to an owner's interest cannot be made on this window. To edit any of the owners, click on the Edit button in the right column beside their interest. This will switch the window back to the owner interests tab for that owner, ready to be edited. Please note: only saved entries will show on the interest views tab. Until an entry is saved on the Owner Interests tab, the changes will not be reflected on the Interest Views tab.

Check Interests
The check interests button will show you a snapshot of all the interests in a particular well, and give totals for each class of revenue and expense. Changes must be saved for them to show on this window as well.

Total Well Interest
Gives the total of the interest class being viewed. It is necessary for this to total 100 so that all amounts entered into the system using this interest class can be fully allocated to the owners. If the total does not equal 100, edit the appropriate interest within the well to correct the total. It is possible that you may need to add a dummy owner to bring the total to 100. Please see the Dummy Owners information in the Help by Subject tree.

Documents Tab

The Documents tab allows you to associate files with this record and then view them from within the software at any time.

This capability is offered as an optional module. You will not be able to see this tab unless you have purchased the Document Management module

Link Doc:
A new document can be associated with this record by clicking on the "Link Doc" button. You will be able to browse to the desired file. After selecting the file it will ask you to specify a description for the file. Once a document is selected it will be listed to the left with the description that you typed in.

View Doc:
You can view a document associated with this record by selecting the document from the space on the left and then clicking this button.

Remove Doc:
A document can be removed from the list by selecting it then clicking on this Remove Doc button.

Show Paths:
Each stored file will be listed using the description that you keyed in for it when it was linked. Clicking on this "Show Paths" button will change what is displayed so that is lists the full file path to this file instead of the description.

Treeno:
The Treeno button allows you to access and save documents on the cloud. The capability to store documents on the cloud is only available if you purchased the optional "Cloud Document Management" Module. You will not see this button unless you have purchased that module.

Setup/Entry Tips

Automatic Calculation of Working Interests
This window is designed to help you as you enter the Division of interest for a well. The end result is that each owner's interest for each class should be listed as the "8/8ths" amount. The automatic calculation makes it easy for you to figure this percentage out when entering.
You will first enter all Royalty and Override owners, and then enter the Working Interest Owners. When entering the working interest owner's percentage, you will just need to fill out the "Working Interest" field for what he should receive after the Royalty Interest owners have been paid. This will then update the Gas Revenue, Oil Revenue, Other Revenue and the taxes fields. Once you save the record, these percentages that you entered will change to be the 8/8ths amount. The 8/8ths amount is the percentage of the total that each owner should receive including the Royalty and Override interests.

For example: if you have three owners in a well where one is a Royalty owner (12.5%) and the other two are Working Interest owners (50% each), this is how you would enter it in the DOI window. Enter the Royalty owner first and give him 12.5% interest in Oil, Gas, Other, and all of the taxes. Then enter a Working Interest owner by putting his interest (50%) in the "Working Interest" field only. When you press the save button it will automatically calculate the interest for the Oil, Gas, Other, and all of the taxes fields to be 87.5%. This ensures that the total Revenue Interests do not exceed 100% once they are all added. If you do not like this automatic calculation simply mark the option in the top right corner to "Don't Automatically Calculate Net Revenue Interests."

Copy Division of Interest Utility
The Copy Division of Interest Utility will allow you to copy interests from one well to another or one interest class to another interest class. If you have multiple wells set up with the same interests you can set the first wells DOI up then copy it to another well. If you just want to transfer each owners Oil Revenue interest percentage to Expense class 1 you can do that also on this window. This utility can be found under the Utilities menu.

Check Division of Interests Utility
The Check Division of Interests utility will cycle through all of your wells and give you a report if any wells have an interest that is not equal to either 0% or 100%. This utility can be found under the Utilities menu.

Dummy Owners
Use a "Dummy Owner" as a place holder for any non operated interests, or interests that you are not responsible for. This is a special owner that will trigger the processing to recognize the portion of the well that you do not operate. See the Dummy Owner topic for more information.

Unknown Owners
If you have a portion of the well that you are going to need to operate but do not know who owns the interest, you can set up an unknown owner and assign the interest to that owner. The owner does not specifically have to be named unknown, you can give them any name you want. Make sure the owner is on hold on the owner information window. Once you do figure out who owns the interest you can use the Transfer Division of Interest Utility to transfer the interest and history from the unknown owner to the correct owner.

Carried Interests
Use the 'Before Casing Point' (BCP) class (or any unused expense classes 1-5) for the owner percentages while the interest(s) is being carried. Fill in the 'Working Interest' expense class with the interests that will be used when the phase is completed and the interest(s) is no longer carried. When entering all the drilling and completion costs for the well, change the class in the expense entry window, such as Enter Bills, to use the 'BCP' expense class (if the expense code chosen is not already defaulting to that class). After the contractually agreed upon time, you will then choose the 'Working Interest' class when entering expenses for the well.

Why do the numbers keep changing?
Review the section above about the automatic calculation of Working Interest owners. This explains why the numbers may be changing on you when you save the receipt. If you do not like this automatic calculation simply mark the option in the top right corner to "Don't Automatically Calculate Net Revenue Interests."