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Joint Venture Audit

Joint venture audit that tests each operator bill line by that JOA's own terms, and drafts the written exception while the year is still open.

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Follow one water rate to a signed letter ↓
The problem

The operator's bill stands once the date passes, tested or not

Most agreements make the partner pay first and argue later. After that the clock runs: a set time after the bill year, the bills are presumed correct unless a specific written exception has been taken. Starting an audit does not stop it, and a question sent to the operator may not count as a claim.

Each agreement has its own overhead rates, affiliate limits, interest caps and approval thresholds, and amendments change them. Audit teams carry those terms on a summary sheet, pick a sample by judgment and test it in spreadsheets. The rest of the year goes past the date untouched, including the charge that only looks wrong once someone reads the amendment.

Built forJoint venture auditorsAudit managersNon-operated managersJoint venture counselInternal auditors

The Problem Today

Partners get a fixed time to dispute a bill, and hand samples leave most lines untested when that window shuts.

24
months to take written exception once a bill year ends published
10%
of lines read in 14 audits of 80 hours, at 30 seconds a line our estimate

Checked by hand today

  • Overhead
  • Labor
  • Affiliates
  • Vehicles
  • Each agreement differsEach venture has its own rates, caps and limits
  • An audit stops no clockStarting an audit does not hold the date

The Solution

  1. Read each agreementRates, limits and caps, each tied to its page
  2. Test each lineBill lines tested by that agreement's own terms
  3. Catch the overchargeThe billed rate set against the agreed rate, bill by bill
  4. Draft, sign and date itAgent drafts, auditor takes it, manager signs before the date

Built-in controls

  • The manager opens each source before signing
  • Agents never sign, date, issue or settle
  • Each test and signature kept in the audit file

What You Get

Audit teams issue specific written exceptions before the date, with the clause and the bills behind each one.

  • See what would be lostAny date shows what shuts if nobody acts
  • Repeat issues spottedThe same overcharge found across ventures and years
  • Disputes tracked to the endReplies, credits and settlements, each with its clock
57 days before the date

A joint venture audit year with 57 days left and one rate nobody approved

Support for one venture arrived 20 days late. The auditor has the rest of the year to test it, and the bill year shuts in under two months. This is that day, on the working screens.

demoVentures, operators, people and dollar figures here are sample data.

  1. 0157 days left

    2024 bills: $412.0M billed, $61.0M still untested

    Joint venture auditor

    Each audit year is a bar of dollars, with the untested part drawn as ice melting toward its date. Below it, the year's spend is a map of blocks by charge type, sized by dollars and shaded by findings. The year before shut with $291.8M never tested, after $96.4M was sampled by hand. Nobody wants a second bar like that.

  2. 02Before the run

    Picked as a date, the year shuts on screen

    Non-operated ventures manager

    The manager asks what is at stake in dollars. Choosing the last day of the year draws 2024 as shut: every untested dollar and every finding not yet issued is marked as lost, and the line under the bars says this is a preview and nothing has changed. Back on today's date, the auditor starts work.

  3. 03The run

    $52.8M tested in one run, and water disposal turns red

    Joint venture auditor

    The agents load the late support, tie its lines to the bill totals and test each one against the checked terms for that agreement. Tested dollars rise to $403.8M. Only $8.2M is left, waiting on two operators who have not sent support. One block of the map goes red: water disposal, with $1,976,172 in findings on the 2024 bills.

  4. 04The finding

    14 bills at $0.89 a barrel against $0.62 in the amendment

    Joint venture auditor

    The finding opens on the sum, bill by bill: barrels, billed rate, agreed rate and the share. The operator's affiliate raised the rate by letter to the operator, with no copy to partners. Of $2,307,555, the part on 2024 bills shuts first; the two 2025 bills ride in the same exception rather than waiting a year for a second letter.

  5. 05The letter

    A letter that names the bills, the amount, the clause and the claim

    Joint venture auditor

    The drafted exception states what was billed, cites the paragraph of the amendment, gives the barrels and the gap, and claims the adjustment. It asks the operator to produce any approval it holds and reserves rights on lines not yet tested. Four checks under it confirm the bills are named, the amount stated, the clause cited and a claim made, so it cannot go out as a general protest.

  6. 06Before taking it

    The operator's likely answer, before it arrives

    Joint venture auditor

    The injection line was under repair, so water may have been hauled at a real extra cost. The screen says so plainly. That still needed the parties' approval under the amendment, but it may shape a settlement later. The auditor reads it, keeps the claim as drafted and takes the finding, which sends it to the audit manager.

  7. 07Before signing

    41 ballots, 16 minutes and 212 AFEs, and none approves the rate

    Audit manager

    The sign button stays off until the manager has opened the amendment, the rate letter and the approvals search himself. The search states what it covered and what it means: no approval was found in the records the company holds, which does not prove none exists. That is why the letter asks the operator to produce one.

  8. 08Signed

    Signed and dated 57 days before the window shuts

    Audit manager

    Once the manager signs, the signature sets the date on the letter and the finding reads issued. Whoever took a finding cannot sign it; nobody signs their own take. Agents drafted each word but cannot sign, date, issue or settle, and the audit file records who opened which source before signing.

  9. 09After signing

    The operator sees issued exceptions and nothing else

    Operator's partner contact

    The partner contact at the operator sees only what was signed and issued on that one agreement: the exception with its letter, and an older one already part accepted. There are no drafts, no questions and no other ventures. Each can be accepted, denied with a reason, or answered with a request to meet.

  10. 10After issue

    A reply clock set by the form behind each agreement

    Joint venture auditor

    With the new exception, eight are issued, $3,746,014 claimed in all. On this form the operator has 180 days to reply in writing. Other rows show an offer waiting for a person, a denial with no support behind it, an accepted claim with no credit yet on a later bill, and a part acceptance where a resolution meeting can be called.

Four bill years on the non-operator audit clock

What each year looks like on the closing window after the run. The oldest year shut before anyone tested most of it.

Bill yearBilledTestedWhere it stands
2023$388.2M$96.4M sampled by handShut: $291.8M never tested, now presumed correct
2024$412.0M$403.8M57 days to its date; $8.2M waits on support
2025$437.6M$391.2M422 days to its date
2026 so far$352.4M$318.9M788 days to its date

demoSample data, from the working solution.

The water rate, worked from barrels to the claim

The sum the letter carries, as the screen shows it bill by bill.

Barrels on the 14 bills27,348,800
Billed rate less agreed rate$0.89 billed, $0.62 in the amendment$0.27 a barrel
Overcharge, gross$7,384,176
Claim at the 31.250% share$2,307,555
Of which on the 12 bills rendered in 2024shuts at the end of the 2024 window$1,976,172
Of which on the 2 bills rendered in 2025a year later$331,383

demoSample data, from the working solution.

Around the audit

Findings, JOA terms, repeats and counsel in a joint venture audit

The rest of the audit team's screens for the same year.

Findings20 findings from 22,056 flagged lines, each with venture, claim, confidence, state and next date. The header splits issued, not yet issued and still questions.
Terms of one agreementOverhead rates, the interest cap, affiliate limit, vehicle schedule and the water rate, each with where it sits. A person confirms each term and a colleague checks it.
Repeat exceptionsThe same issue across ventures and years: a flat vehicle fee three years running, engineers billed direct on two agreements. A person starts any new test.
Questions for counselFindings under 70% confidence, written extensions and form questions go to counsel. The ruling stays on the record, beside who asked and when.
Clock and rulesThe audit floor, the issue target ahead of the date, the close sample and the settlement limit. A change applies only once a second person signs it.
Audit fileEach test, draft, signature and reply in order, people and agents apart, with the exceptions register, the trail and the issued letters as downloads.

demoSample data, from the working solution.

Who takes an exception, who signs it, and who answers it

Whoever takes a finding cannot sign it, and anything under seventy percent confidence goes to counsel first.

Joint venture auditor
Sees
The flagged lines, the sum, the drafted letter and its sources
Signs
Takes, changes or rejects each finding, with a reason
Audit manager
Sees
Each source behind the finding, opened by him before the button turns on
Signs
Signs and dates the exception, or sends it back with a reason
Non-operated ventures manager
Sees
What shuts on each date, in dollars, and offers above the settlement limit
Signs
Settlements, extensions and the year's close
Joint venture counsel
Sees
Low-confidence findings, extension drafts and form questions
Signs
A recorded ruling, with reasons
Operator's partner contact
Sees
Issued exceptions on that one agreement only
Signs
Accepts, denies with a reason, or asks to meet
Internal auditor
Sees
Each finding, signature and reply
Signs
Nothing: reads and exports the file
The agents

An agent drafts each exception, and none of the seven can sign it

Seven agents load, read, test and draft. People sign.

Bill loader

Loads bills and detail files, ties lines to bill totals, and holds what does not tie.

  • Never changes a line
JOA reader

Reads agreements, exhibits, amendments and ballots, and proposes each term with its page.

  • Never guesses a missing term
Line tester

Tests each line by that agreement's checked terms and groups failures into findings.

  • Never takes an exception
Support chaser

Drafts support requests and reminders, and tracks their due dates.

  • Sends nothing itself; a person sends
Exception drafter

Drafts the specific, detailed written exception with the bills, the amount and the clause.

  • Never signs, dates or issues
Repeat spotter

Finds the same issue across ventures and years and proposes where to test next.

  • Never adds a finding without a test
Reply reader

Reads operator replies, checks that a denial gives a real reason, and watches later bills for credits.

  • Never settles

Where the bills, the agreements and the approvals come from

Each is read, and none is changed by an agent.

Operator detail filesMonthly bills and their line detail, tied to bill totals
Your ledgerWhat was paid on each bill, at your share
Document managementSigned agreements, exhibits, amendments and elections
Ballots and minutesOperating committee minutes, ballots and AFEs, searched for approvals
Secure file shareSupport the operator sends against each request
Published overhead factorsThe yearly adjustment applied to overhead rates

What non-operated venture teams ask before the window shuts

What is a joint venture audit?

A joint venture audit is a non-operator's test of what the operator billed to the joint account against the operating agreement and its accounting procedure. Here agents read each agreement's terms, test each billed line by them and write up the exception, and the audit manager signs it before the window shuts.

Is this the same as reviewing each monthly joint interest bill?

A monthly review reads statements as they arrive. A joint interest audit looks back over a whole bill year, with support requested from the operator, and ends in written exceptions that must be taken before that year's window closes.

Does sending a support request protect the claim?

No. A request is not an exception and does not stop the clock. Where support is late, the auditor can turn a question into a protective exception with the bills and an estimate, which goes to counsel and then to signature. A written extension may hold the date only if counsel confirms it for that agreement.

What makes a written exception specific enough?

The letter names the bills, states the amount, cites the clause and makes a claim. The screen checks all four, and a letter missing the amount cannot be sent on as a general protest.

Can the auditor change what the agent drafted?

Yes. The auditor takes the finding, changes it with a reason, or rejects it with a reason. A change flows into the sum, the letter and the operator's view, and the old claim leaves the letter.

Who can see the operator's side?

The operator's partner contact sees only exceptions that were signed and issued on that one agreement, and can accept, deny with a reason or ask to meet. Drafts, questions and other ventures stay out of view.

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and its signed JOA.

See that year’s lines tested against your own agreement, with the exception drafted and the date in view.

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