Expense Codes

An expense code needs to be added for every type of expense that the wells will be incurring. The number and detail of expense codes you create can be as broad or specific as you like. The expense code name will print by default on the Owner Distribution Statement and Owner JIB Statement for any expenses incurred on the well.

Expense Codes are simply a list of all expenses that you will be entering into the software. This list is set up so you can have consistency when entering expenses and how each expense shows on reports. They allow you to get detailed reporting information that is needed for the oil and gas industry.

Code
A four character alpha-numeric code that will refer to this AFE/expense code.

Name
The name of the expense code can consist of alpha-numeric characters and extend to 25 characters long.

Description
This field allows a more detailed description of the expense code. It defaults to the same as the code name. From the Preferences> Reporting setup, the choice can be made to print the code name or code description on reports.

DOI Class
Each code must have an expense class associated with it. If you are unsure of what class to use, specify Working Interest. The other choices available for expense class are Classes 1 through 5, After Casing Point and Before Casing Point. For further information on expense classes, please see the section on the Division of Interests. Using a class other than working interest allows you to have a specialized interest class (deck) for charging expenses to owners using a percentage other than their working interest.

Section
This allows the expense code to be categorized between any defined expense section codes, such as Lease Operating Expenses, Intangible Expenses and Tangible Expenses, etc.

AFE Code
Mark this option if this expense is an AFE expense. This will make the expense show up on AFE's and will prevent the expense from showing up on investors statements since it is an AFE Expense. However, the expense will show up on investors statements if the option is marked to "Allocate Expenses to owners on JIBS" in the AFE Preferences. Do not mark this option unless you have purchased the AFE Module with the software.

JIB Only
Marking the "JIB Only" option on the Expense Codes window will override the "JIB Int" option on the Division of Interest window for the respective expense code only. The "JIB Only" expenses will only process on a JIB run even if the "JIB Int" (on the division of interest window) option is not marked for each interest. This allows you to JIB (or bill) certain expenses to owners on a JIB statement even if they are set up to "net" (expenses are deducted from check).

If all of your WI owners have the "JIB Int" option marked on the Division of Interest window then you probably do not need to mark this option (JIB Only) because the "JIB Interest" option is already telling the software to JIB the investors. The only exception would be if you have some royalty owners that you will need to bill certain expenses for that should not be deducted from the royalty check that they receive.

Generally this option will not be used. If you are not sure how to mark it then I suggest leaving it unmarked.

If this option is marked for any expenses you will have to close a JIB run when these expenses are entered in order to process them and create the statement.

Post Operator's Share Of This Expense To QB Account
This field will only be used if you have an owner that is marked to "Post this owner to QB Income and Expense Accounts" on the options tab of the owner information window. When a run is closed the portion of any expenses allocated to an owner with that option marked will post (debit) directly to the expense account specified here for the respective expense code. This is done as a shortcut so that you do not have to bill your own company for the expense, it will just post your portion of this expense code directly to the desired expense account.

If you do not have an owner marked to "Post this owner to QB Income and Expense Accounts" on the options tab of the owner information window then you can leave this field blank.

Post Operator's Income As Vendor For This Expense To QB Account
This field will only be used if you have a vendor setup in QuickBooks with the terms of "POST". When a run is closed any fixed expenses and expenses entered directly on the well expenses by well window for that vendor will credit the income account specified here for the respective expense code. The account specified here should be an income type of account.

This is done as a shortcut so that you can just post the revenue directly to an income account instead of creating a check to pay your own company then making this entry once you deposit the check.

If you do not have a vendor with terms of "POST" then you can leave this field blank.

Expenses entered on the Enter Bills screen will not use this account as they will follow the normal A/P process which will create a check.

QuickBooks Posting Account
This field will only appear if both this Expense Code is marked as an "AFE Code" and the "Allocate Expenses to owners on JIBS" option is NOT marked in the AFE Preferences. If this field is showing it will show in place of the Accounts to Use for Posting Operator Owner/Vendor Revenue fields.

Since this is an AFE expense and it will not be allocated to the owners on their statement then it does not need to post to the Expense Clearing account like all other well expenses do. The amount of this expense will Debit the account chosen here when entered. Generally this will be an expense account or may be named work in progress depending on your companies accounting practices.

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