COPAS: Tips For the Non-Operator in Interpreting, Negotiating, and Drafting
The COPAS (Council of Petroleum Accountants Societies) accounting procedure is used by virtually all of the players in the oil and gas drilling and operating business. It is commonly referred to as the COPAS or C exhibit to the operating agreement and is essential to the modern oil and gas operator and non-operator alike. As it is used as an exhibit to the operating agreement, it is essentially a handbook for the operator. This paper will not be an attempt at a full analysis of the COPAS, rather a limited look into areas where we have encountered abuses under the COPAS, which abuses, by definition, would have to be committed by the operator.
Recognizing that virtually all of us are operators some of the time and want to be more of the time, please understand that this paper is not talking about all of us, unless, of course, we are all abusing our non-operating partners. So the perspective of this paper is to explore how we (as non-operators) can protect ourselves from the abuses of some operators. While I realize that there are two sides to the issue, when I refer to abuses under the COPAS, I mean abuses by the operator, because the operator is the only mover, the only actor, the only doer under COPAS. It is not much of an over-simplification to say that the non-operator just pays invoices received from the operator and has rights to audit the progra
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