TABLE OF CONTENTS


What is the Payout process?

The Payout Process is an Enertia reporting tool that allows the tracking of Expenses and Revenue so users know when to switch between Before Payout (BPO) and After Payout (APO) decks.

 

The Payout Calculation is:

 

(Expenses * Penalty) - (Revenue - Burdens) = Payout Balance

 

The Payout Balance will carry forward after each process is run and is the basis for statements when run. When the Payout Balance is equal to or Less than $0 it is time to use the APO deck for the Property. 

 

Expenses are pulled from the property based on invoices Accounting or Service dates. The Provisions tab of the Payout provides the penalty for each category Type/Code/Exclusion to be applied to the Calculations. 

 

Example: If there were $200,000 in expenses that the owner went non-consent, and the Penalty is 400%, then the Provisions would be set up for a 400% Penalty. When calculated the Expense amount would be $800,000 ($200,000 * 400%).

 

Revenue is pulled from the property based revenue amount, less taxes and Burdens based on the Accounting or Service (Prod) dates. The burdens can be calculated using the Royalty Override field, using the 100% Revenue checkbox, or using a calculated PO NRI. 

 

Example:  When you run the Payout Process and you have $100,000 in Revenue. Taxes are taken out ($5,000)

 

  • Royalty Override (burdens) will reduce the Properties revenue by the entered percentage. If used this will override the Calculated PO NRI.
  • 100% Revenue Checkbox will keep revenue at 100% and will override the Calculated PO NRI.
  • Calculated PO NRI:  When an APO and BPO decks are entered the system calculates the Inflated PO NRI by taking the APO NRI and dividing by the APO GWI. The payout will be calculated based on the Inflated NRI if the Royalty Override NRI or Use 100% Revenue is not used on the Payout Detail tab

 

NOTE: Best Practice is to use the decks to generate the Name and Address. Then use the Royalty Override to calculate Revenue - Burdens. 

 

The Payout functionality includes the ability to produce owner level payout statements. The owners can be selected from the After Payout (APO) deck and the payout is calculated based on the owner’s Net Revenue Interest (NRI). The Payout Process accumulates all unprocessed revenue and expenses to include them in the payout calculation. The process also considers the payout provisions and adjustment entries. 

 

Payout Attribute

General Overview

The Payout Detail form requires that additional information be captured during the setup so that payouts can be calculated and processed. The additional fields include:

 

 

  • Rev Corp - This field identifies the Corp or affiliate Corp that disburses the revenue.
  • Exp Corp - This field identifies the Corp or affiliate Corp that bills the expenses.
  • BPO Deck - Before Payout Deck. This field is required in order to use the Payout Process. The Payout Owner tab can be populated by selecting owners from the BPO and APO deck.
  • APO Deck - After Payout Deck - This field is required in order to use the Payout Process. The Payout Owner tab can be populated by selecting owners from the BPO and APO deck.
  • Royalty Override - This field can be used to override the Inflated NRI calculated on the Payout Owner’s tab and will be used in calculating the amount of revenue to apply to the Payout. (Deducts)
  • Use 100% Revenue checkbox - This field can be used to override the Inflated NRI calculated on the Payout Owner’s tab to be 1.00000, and will be used in calculating the amount of revenue to apply to the Payout.
  • Report Frequency - This sets the frequency of how often the payout statements are processed and provided to the involved parties.
  • Gas Balancing Inflation- There are three options in regard to with Gas Balancing Inflation, the system will default the NO INFLATION option when the attribute is added.
    • Inflate Gas and Plant Product transactions by Shipper Contract Marketing interest. This option will inflate ALL Gas and Plant Products. In the Payout Inquiry a column will be added to show the inflation amount.
    • Only Include Gas and Plant transaction from GB transactions and inflate by Mkt Interest from the Shipper Contract related to the same GB Transaction. This option will inflate only those transactions where the Shipper contract was setup for GB. All non Gas Balancing transactions will not be inflated.
    • No Inflation of Gas and Plant Product transactions. Use this option if you are not doing Gas Balancing, or if you are making Gas Balancing entries to record your 8/8ths.

 

 

Only transactions within the Begin and End Date specified on the payout are included in the payout calculation. The Payout can be either Accounting Date Basis or Service/Production Date basis.

 

Once a payout has been finalized in a payout process, the  button becomes available.  This button will remove any payout process(es) that has been previously finalized. Be careful with this button because your prior payout reports may not match after you have cleared out the prior payout processes.

 

Payout Setup

The payout setup requires that you specify the BPO and APO decks on the Payout Detail. There is a setting on the Deck Type to indicate that the deck type can be used for Payouts and you can also indicate if you want to prevent the payout deck from being used for a revenue transaction. The Deck Type form is a Data Driven Maintenance form that can be opened by using the Right Click or the F6 function key. 

 


Payout Owners

The Payout Owner tab of the attribute can be completed once the BPO and APO decks have been added to the Payout Detail.
 

 

The Owners from both decks will appear in the Payout Owners’ tab grid. 

 

All of the owners or just the owners impacted by the Payout may be selected. The system calculates the Inflated PO NRI by taking the APO NRI and dividing by the APO GWI. The payout will be calculated based on the Inflated NRI if the Royalty Override NRI or Use 100% Revenue is not used on the Payout Detail tab. 

 

 

Only the owners selected will receive the payout statements from the process. Tabs (All, Selected and Not Selected) help identify the owners selected and not selected to receive a payout statement. 

 

Payout Provisions

The only enhancement to the Payout Provisions is the addition of the  button. This feature allows the penalty amounts to be recalculated if the provision is changed after the payout has been processed. Any penalties or special provisions are noted on this tab for inclusion in the payout calculation.

 

 

Payout Adjustments

Payout Adjustments can be entered and included in the payout calculation on the Adjustments tab. Expense and Revenue balance forward amounts are typical payout adjustment records.

 

 

Balance forward records are identified with the 'Balance Forward' checkbox. Adjustment records are included in the first Payout process and cannot be changed or deleted once they have been included in a process.

 

Payout Process

The Payout Process can be found by navigating to Processing/Other Processes.
 

 

Process Selection

The Effective Date and Process Date must be specified to start the Payout Process.
 

 

The process mirrors all other processes in Enertia so that you follow the process steps and can’t proceed if there are errors.

 

 

Process Steps

 

Confirm Selection step - When all of the records to be included in the current payout process have been selected, select the. To make selections easier, you can filter the grid using the filter prompts feature.

 

Payout Preliminary Recap step - This step is designed to identify errors at the earliest point in the payout process in order for them to be addressed and the process continued. This step evaluates all of the selected items for the payout process and determines if there are any errors or problems that would prevent you from continuing the process. If errors exist, you must either correct the problem, or backup in the process to Step 1 and de-select the problem item(s).

 

Payout Processing step - This step will calculate the Payout amounts and take you to the next step.

 

Set Report Frequency - This step will open up the Payout Frequency Report form.
 

 

The report frequency defaults from the setting on the Payout attribute, but can be changed during the process.

 

Recap step - This step produces two different recap reports. Report 1000716 - Payout Process Recap (3144 - Legacy Rpt#) shows the amount of revenue and expense processed at a summary level, and report 1000715 - Payout Process Recap w Details (3276 - Legacy Rpt#) shows the amount of revenue and expense processed at a detailed level 

 

Report Payout Process Recap displays:

 

 

Report Payout Process Recap with Detail:

 

 

It is advised that this is thoroughly verified before moving on to the next step of Finalizing. 

 

Finalize - After reviewing the Recap, you are now ready to click on the finalize step to complete the Payout Process. Once the process is finalized, the payout statement and mailer reports can be prepared and the Payout Inquiry shows what was processed.


Payout Reporting

There are two reports available for payout reporting. Report 3260 is the Payout Statement report and report 3274 is the Payout Statement Mailer.

 

Payout Mailer Report #3260

You specify the Payout and Report Date prompts. The report date prompt will drive which payout statements are generated for the selected period. For example, if you used a report date of 02/28/2020, then only monthly payouts would generate. If you selected a report date of 03/31/2020, then monthly and quarterly payouts would generate in the payout statement report. 

 

 

The report will display the actual Payout Statement for the period selected. The individual owner is also shown on the report.

 

 

Payout Mailer Report #3274

The Payout Mailer includes the Payout Statement but adds a header page that summarizes the payout status with the owner and owner address for mailing.

 

 

 

Payout Inquiry

The Payout Inquiry can be opened from the Payout Detail tab of the Payout Attribute by clicking on the  button. You can also add the menu option to the Inquiry Section of the Enertia main menu.

 

 

The Payout Inquiry opens to the Payout List tab so you can select the payout to review the processed revenue and expense data for payout status.

 

 

The Payout Inquiry form is only populated once a Payout Process is finalized. The Payout Detail tab is displayed in three grids. The top grid shows the payout balance with summarized revenue and expenses. The second grid displays the revenue by production month and product for revenue. The third grid displays the expense detail. As you change rows in the summary grid the revenue and expense grids will also change to stay synchronized with the summary grid.

 


The form can be set to show only revenue or expenses by selecting or deselecting the or buttons. There is also an option for the level of expense detail that is shown in the bottom grid. The radio button summarizes the expense by billing category type. The  radio button displays the expense data by billing category code.

 

The Payout Inquiry tab is designed to replace the Management Inquiry version of the payout. When you first click on the Payout Inquiry tab, the tab will be blank. In order to view the payout details, you will need to load the form. The information displayed is broken down into Revenue and Expenses. The Accumulated Payout Position will be displayed at the bottom of the grid. This grid is exportable as with any other grid in Enertia. You can also double click on any of the revenue/expense items listed in the grid to view the details.

 

 

Owner Basis Payouts

The Owner Basis is used when you want to define a specific owner for payout tracking.  This owner must be receiving distributed revenue and JIB expenses so the payout can be calculated on his net share.  Similarly, to the Property Basis Payout, the process will include transactions for the payout period based on either accounting date or service date.

 

 

The other tabs, with the exception of the Payout Owners, would be completed just like they are for Property Basis Payouts. If you have multiple owners that need to be sent payout statements and you are using Owner Basis, then you would need to set up separate Payouts for each owner.

 

Enertia Payouts FYI’s

 

  • Tracking payouts at a Unit level, tie the well completions to the Unit in the Lookup. Tie the payout to that Unit. Expenses and revenues are booked at the well completion level, the system will pick up all expenses and revenues and roll them up to the Unit for the payout to use.

 

  • When you check the overriding royalty field, the deck becomes just used for name and address only (reporting)

 

  • Overriding royalty field filled out (then you won’t have 100% checkbox marked) the system would reduce your revenue by that overriding royalty value (aka royalty penalty). All of the owners will show the same royalty penalty calculation.

 

  • The 100% checkbox checked- system won’t reduce the revenue, it uses 100% the system uses the deck to calculate the NRI for the WI owners. 

 

  • If the override royalty field is blank and 100% checkbox is not marked, then the system will use the deck to calculate the royalty penalty.  You must have a valid APO deck setup for this to work, and both decks must have both the NRI and GWI fields populated on the deck.  The system will use each owner’s calculated royalty penalty in calculating payout. If you have uneven burdens in the deck, one owner can payout before the other owners.

 

  •  Owner level payouts are shown at net but are for owners that are in the existing deck. It picks up all the transactions booked to that owner (both revenue and JIB). A good example would be tracking non-op payouts.

 

  • Property level payouts are shown at 8/8ths. The reports show 8/8ths detail and the owners you select on the payout owners tab will be used to put their name and address on the report however the report will still be shown at 8/8ths.