Net Vs. JIB

Within the Accounting Manager's disbursement processing, all owners can be viewed as Net or JIB. It is important to understand how this setting will affect the processing for amounts allocated to your owners during the run closings.

Net: Expenses for Net owners are processed when the Revenue Run is closed. The owner's expenses will be deducted from the revenue that he earns, and a net check will be sent to the owner. If the owner has more expenses than revenue, this amount will go into suspense and will be known as a Deficit. Deficits are posted to the G/L to the account chosen on the posting preferences as the Deficit account. The owner's Deficit balance is stored as suspense on the suspense history window. If the owner sends in a check for this deficit, you can receive the payment in the Receive Owner NET Payments window. If the owner does not pay the deficit, it will automatically be deducted from future revenue before any more revenue is sent to him until the deficit is covered in full.

JIB: Expenses for JIB owners are processed with the JIB Run is closed. A JIB invoice (created by the JIB closing) will be need to be printed and mailed to the owner for all of the expenses, and a check (created when the Revenue Run is closed) will be sent to the owner for all of the revenue. The amount of the expenses is posted to the account chosen on the posting preferences as the JIB Receivable account. The owner's balance is stored in the invoice file. You can edit an owner's balance by creating or editing an invoice on the Sales/Invoicing window. When the owner sends you a check for his portion of the expenses, you can receive the payment on the Receive Owner JIB Payments window. If the owner does not pay for the invoice, his balance will continue to accumulate while his disbursement checks will still be sent to him in full.

In order to mark an owner as being Net or JIB, you will need to use the Division of Interests window. In this window, you'll find an option 'JIB Int.' If checked, the interest being displayed will be considered a JIB interest. If unchecked, the interest being displayed will be considered a Net interest. We'll assume that all royalty and override owners are Net since these owners are not typically allocated any well expenses. Therefore, when entering a royalty or override interest within a well, leave the JIB Int option unchecked.

Since the status of JIB or Net is specified for each individual interest within a well, it is possible for an owner to have a combination of Net interests in some wells, and JIB interest in other wells.

If the JIB Int option is checked, all expenses allocated to that owner within that well will be invoiced to him during a JIB run closing. The JIB setting does NOT apply to only a portion of expenses such as drilling and completion expenses. Therefore, if the JIB Int option is checked, all expenses, including lease operating expenses, will be invoiced to the owner during the JIB run closing.

We do not recommend changing owners between being Net and JIB. However, we realize that sometimes this has to be done. If you have to change this setting for an owner, you can do so with the following steps. Understand that if you try to view past reports for this owner, they may be affected.
Switch an owner from NET to JIB:
Switch an owner from JIB to NET: