COPAS overhead guide
How operators charge overhead to the joint account under a COPAS accounting procedure, how drilling and producing well rates work, and how rates change every April 1. Includes calculators for escalating rates and estimating a month's overhead.
What overhead is
The COPAS accounting procedure, usually attached to the joint operating agreement as Exhibit C, splits joint account charges into two groups. Direct charges are billed at cost, such as field labor, materials and contract services. Overhead is an indirect charge that pays the operator for costs that aren't billed directly. That includes accounting, administration, office services and general management of the joint property.
Several versions of the COPAS procedure are in use, including 1984 and 2005 forms. Which costs are covered by overhead, and which can be billed directly, depends on the version attached to your JOA and the elections the parties made in it. Always work from that document.
COPAS doesn't set overhead rates. The rates are negotiated between the parties and written into the accounting procedure. COPAS publishes only the yearly adjustment percentage.
Ways to charge overhead
Fixed rate
Most common onshoreA flat monthly charge per well, with one rate for drilling wells and another for producing wells. It's adjusted every April 1.
Percentage basis
Less commonOverhead is a negotiated percentage of the development and operating costs charged to the joint account.
Major construction and catastrophe
Special projectsSeparate overhead for large construction projects, such as facilities, and for emergency operations. It's often a tiered percentage of project cost set in the procedure.
Drilling well rate vs. producing well rate
Charged per well per month while the well is being drilled or completed. Charged to the well's AFE as a capital cost.
- Prorated by days for partial months.
- In the 1984 form, for example, charges start when the well is spudded and stop when the drilling or completion rig is released, whichever is later.
- Charges usually stop during long suspensions of operations. The 1984 form sets this at 15 or more consecutive days.
- Many procedures also apply the drilling rate to rig work on an existing well, such as workovers, recompletions or plugging, when it lasts beyond a set number of days. Check your form's wording.
Charged per producing well per month. Billed to operations as LOE.
- A well that produces or injects during the month generally counts as a producing well for the whole month.
- Whether a shut-in well counts depends on the reason and the form. Temporary shut-ins for lack of a market or for regulatory reasons are treated differently from permanent shut-ins.
- Plugged and abandoned wells don't count.
- Each separately produced zone in a multiple-completion well may count as its own well.
The April 1 adjustment
COPAS accounting procedures call for fixed overhead rates to be adjusted on April 1 each year by a percentage COPAS publishes. The percentage comes from Bureau of Labor Statistics wage data. The original index was discontinued in 2003, and COPAS Model Form Interpretation 50 (MFI-50) describes the replacement index used since. Adjusted rates are rounded to the nearest cent.
The adjustment can go down as well as up. Here are the three most recent factors:
- Check when the first adjustment applies. The adjustment applies to the rates in the agreement, starting with the first April 1 the procedure calls for. If the rates were negotiated recently, find out from the agreement whether the first adjustment falls this April or next.
- Apply decreases too. A negative factor lowers the rates. Skipping a decrease overbills partners and is an easy audit finding.
- Missed adjustments can sometimes be caught up. COPAS guidance (MFI-47) addresses overhead rate adjustments. Operators who forgot an increase may be able to bill it within the period the procedure allows for adjusting billings, but the rules are contested, so get guidance before rebilling.
- Other rates move with it. Some COPAS procedures adjust material loading and unloading rates by the same percentage.
Calculator: escalate overhead rates
Rate history
Enter the base rates from the accounting procedure and the first April 1 they were adjusted. Recent COPAS factors are filled in. Add earlier years from COPAS's published table. The starting rates are examples only.
| Effective date | COPAS adjustment (%) |
|---|
| Rates effective | Adjustment | Drilling well rate | Producing well rate |
|---|
Calculator: a month's overhead charge
Monthly overhead
The rates start at the latest escalated rates from the calculator above. Drilling overhead is prorated by days charged in the month.
Sources
- COPAS Economic Factors: overhead adjustment factors, including −0.3% effective April 1, 2026
- COPAS 2025 Economic Factor Summary: +6.3% effective April 1, 2025
- COPAS 2024 Economic Factors: +4.6% effective April 1, 2024
- COPAS General Questions: COPAS doesn't publish overhead rates
- COPAS Accounting Procedures: From a Litigation Perspective (LSU Journal of Energy Law and Resources)
General educational information. Not legal or accounting advice. Your JOA and its attached accounting procedure govern how overhead is charged. Confirm each year's factor on the COPAS website.