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Federal Royalty/BLM Audit Workshop

Federal Royalty/BLM Audit Workshop. Tulsa, Oklahoma September 8, 2011. Financial Management. Data Mining Current projects Data Mining Implementation Work Group Re-organization Specific PASO questions. OGORS. 2014S. ONRR DATA ACCURACY EFFORTS. Timeline. Up-Front System Edits.

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Federal Royalty/BLM Audit Workshop

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  1. Federal Royalty/BLM AuditWorkshop Tulsa, Oklahoma September 8, 2011

  2. Financial Management • Data Mining • Current projects • Data Mining Implementation Work Group • Re-organization • Specific PASO questions

  3. OGORS 2014S ONRR DATA ACCURACY EFFORTS Timeline Up-Front System Edits 1 Month 6-9 Months 2-3 Years 7 Years (Fed. oil & gas) Data Mining Missing Reports, Volume Comparisons, LVS/GVS, High Level Analyses of Sales Values, Royalty Values, Adjustments, etc. Enforcement Actions Enforcement Actions Precision Risk-based Approach Risk-based Approach Compliance Reviews Precision Enforcement Actions EnforcementActions Audits

  4. Data Mining • Compliance Strategy Council (CSC) • Agreement reporting • Missing reports • High Volume discrepancies • Net negatives • Same volume, value, Btu • Trending

  5. Data Mining • Statistics • Volume comparison team • $357,000 in FY 2010 • $573,000 in FY 2011 • Many amended 2014’s • Office of Enforcement involvement in future

  6. Data Mining • Adjustment Monitoring Team • $.5 million FY 2010 • $1.5 million FY 2011 • Numerous cases closed for valid adjustments • Just started to look at net negatives

  7. Data MiningImplementation Work Group • Cross organization representation • 116 reporting issues identified • Pricing • Volume • Adjustments • Allowances • Royalty Rates

  8. Data MiningImplementation Work Group • New edits (December estimate) • Indian net negative • Duplicate 2014 adjustments • Transportation exceeding 50% of RVPA or processing exceeding 66.66% of RVPA less transportation • Incorrect reporting of Transportation Allowances on Section 6 Leases • Invalid Agreement numbers (from warning edit to fatal)

  9. Data MiningImplementation Work Group • New edits (December estimate) • Lease is not producing (from warning edit to fatal) • Federal leases - STC APOP only with PC 04 • Missing API number on Southern Ute properties • Tracking of RSFA violation adjustments • Misreporting of DWRR Codes on OGOR • Multiple Royalty Rates - at least 1 must match • Allow TC for quality banks to be used for NGL banks.

  10. Data MiningImplementation Work Group • New edits (June 2012 estimate) • Do not allow TC 41 & TC 55 when price threshold is exceeded • Must have 4410 election form filed if PC 07, NARM and Federal, or if Indian and PC 07 • Remove internal Adjustment Reason Codes from ecommerce selection list • Ensure proper reporting of DWRR TCs • OINX - Do not allow allowances in index zone • Flag $/MMBtu values which significantly differ from the corresponding index zone price

  11. Data MiningImplementation Work Group • New edits (June 2012 estimate) • Don’t allow allowances on alt. dual accounting properties. • Pricing edits • Incorrect sales volumes on 2014- skewing price • Flag obvious decimal placing problem (56.7 compared to 5.67) • reject 2014 lines when the price submitted is below the published (index) price • Maintain tables of crude types, pricing, and dates (asset management) tied to an edit that identifies incorrect pricing; for onshore too

  12. Data MiningImplementation Work Group • New Data Mining dashboards • Reporting anomalies. • Approvals for venting and flaring. • Duplicate adjustments • Chronic over sufficient royalty estimates and other misreporting. • Net negatives across royalty equation • Overlapping agreements including the % of overlap • Repetitive reporting • Reported royalties later reversed to zero • Related properties with volumes for given time period • Adjustments after closed audit periods

  13. Data MiningImplementation Work Group • Future • Ongoing group to get input from all of ONRR and State and Tribal Royalty Audit Committee (STRAC) • Data Improvement Group (DIG) • Quarterly meetings • Outreach to field offices and STRAC

  14. Reorganization • Production becomes it’s own Division • Solid Mineral finance comes to FM • Combine with Royalty Reporting and Reference Data • Document Processing Section goes under Accounting Services

  15. Financial Management • Specific PASO questions • Adjustments after closed audit periods • Data requests • Debt Collection demands • Indian Over-Recoupment • Miscellaneous • EDI reporting • Fines for bad payment data

  16. Financial Management • Questions?

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