Example of Using Operational Measures and States to Create Statistical Journal Entries
A managing partner of multiple joint ventures with drilling and production activities incurs a monthly electric utility bill for all wells that it operates in a particular region. As part of the terms in the joint operating agreement, the managing partner will:
- Allocate the monthly electric utility amount to the wells in each joint venture.
-
Allocate the electric utility expense in proportion to the water usage of the wells in each joint venture, with an exception for wells in a shut-in state.
The other wells will absorb any cost associated with wells in a shut in state.
The rows in the following table represent water usage operational measures taken for two different joint ventures under the managing partner. Each operational measure includes details such as the operational measure value, the unit of measure, and the operational measure date.
| Joint Venture | Primary Segment Value | Measure Type | Description | Measure Date | Value | Unit of Measure |
|---|---|---|---|---|---|---|
| JV1 | 1001 | WATERUSAGE | Well water usage | 1/1/2021 | 4.00 | Gallons |
| JV1 | 1002 | WATERUSAGE | Well water usage | 1/15/2021 | 56.00 | Gallons |
| JV2 | 2001 | WATERUSAGE | Well water usage | 1/15/2021 | 7.00 | Gallons |
| JV2 | 2002 | WATERUSAGE | Well water usage | 1/15/2021 | 8.00 | Gallons |
| JV2 | 2003 | WATERUSAGE | Well water usage | 1/31/2021 | 9.00 | Gallons |
| JV2 | 3000 | WATERUSAGE | Well water usage | 1/15/2021 | 3.00 | Gallons |
Notice that for both the JV1 and JV2 joint ventures, each operational measure is associated with a different primary segment value. The primary segment value identifies the well that each operational measure pertains to. The table lists measures for two different wells for JV1 and four different wells for JV2.
The managing partner also set up the following operational states for the joint venture. The operational states enable the managing partner to create statistical journal entries for operational measures based on the state of the joint venture when the operational measure was taken.
| Joint Venture | Operational State | Reported Date |
|---|---|---|
| JV1 | Exploration | 1/1/2021 |
| JV1 | Production | 1/10/2021 |
| JV1 | Shut-in | 1/31/2021 |
| JV2 | Exploration | 1/1/2021 |
| JV2 | Production | 1/10/2021 |
| JV2 | Shut-in | 1/31/2021 |
All operational measures recorded from 1/1/2021 to 1/9/2021 will be associated to the Exploration state of each joint venture. All operational measures recorded from 1/10/2021 to 1/30/2021 will be associated to the Production state of each joint venture. All operational measure recorded on or after 1/31/2021 will be associated to the Shut-in state of each joint venture.
The managing partner then runs the process to create statistical journal entries for operational measures, configuring it to process operational measures in the Exploration and Production states only. These statistical journal entries can then be used by the managing partner to determine each well's percentage of water usage. The percentages are then used to determine the portion of the electric expense to allocate to each well.
Before You Can Create Statistical Journal Entries
A joint venture application administrator must set up the Joint Venture subledger to account for the statistical journal entries. See Set Up the Joint Venture Subledger for Statistical Journal Entries for more information.