The oil and gas industry operates in a highly complex business environment, where accurately managing production revenue, revenue distribution, and revenue accounting data and processes is critical…
This is where SAP Production Revenue Accounting (PRA) comes in to help!
The Production Revenue Accounting module is a comprehensive software solution designed to streamline and optimize the management of production revenue, enabling companies to effectively monitor measurement points, manage marketing costs, and improve revenues across the entire organization.
Keep reading to learn more about the key features and capabilities of SAP Production and Revenue Accounting (PRA) and the main advantages for companies in the oil and gas industry, as well as where our team of SAP consultants can come in to help!
What is SAP PRA?
SAP Production Revenue Accounting (PRA) is a robust software solution developed specifically for the oil and gas industry. It serves as a comprehensive management system that helps companies track and optimize the complex processes associated with production revenue.
The PRA solution integrates various components, such as production data management, revenue calculation, royalty and tax management, and regulatory compliance, to provide companies with a unified platform for effectively monitoring and monetizing their crude oil and natural gas resources.
By automating and streamlining revenue accounting processes, SAP PRA helps organizations enhance operational efficiency, ensure accurate financial reporting, and comply with industry regulations over time.
Understanding Different Operation Types
As a vertical industry solution specifically designed to cater to the needs of the oil and gas industry, SAP PRA simplifies operations and makes it easier for companies to manage and optimize business processes associated with the production, refinement, sale, and transportation of oil and gas.
Here are the main operational streams across the Production and Revenue Accounting (PRA) solution:
These operations start from a geological survey of natural reservoirs and consist of both the exploration and production of crude oil and gas for future sale.
To make the oil and natural gas more viable for consumers and future oil and gas sales, downstream operations help gas companies refine the oil and ensure its feasible for commercial use.
Midstream operations involve the transportation of the oil and gas products across specified delivery networks via different modes of transport, including pipelines, retailing, and intermediary storage.
A Breakdown of the SAP PRA Solution
SAP PRA, a comprehensive software suite designed to streamline and optimize the management of production revenue, simplifies revenue accounting and makes it easier to create and maintain marketing costs for contracts across the oil and gas industry.
Its core components encompass essential functionalities such as production data management, revenue calculation, and regulatory compliance, enabling companies to effectively monitor and monetize their oil and gas assets across the board.
SAP PRA can be broken down into five main sub-components, including:
When it comes to finding the right wells and drilling for oil in the most efficient way possible, companies must identify how much oil each well is producing. And, because each well could have a different owner or separate contractual allocations associated with it, it’s important to record the total volumes produced from each well and check input for accuracy before making any major decisions.
Production allocation resources within the SAP PRA module help companies collect production master data, generate reports to keep up with production, and conduct periodic adjustments to ensure numbers are accurate and reliable throughout each production period.
With these resources, companies can follow these steps to set up and manage production quantities and connect the production master data back to the wells:
- Establish allocation rules for each well
- Enter transaction data for total volumes produced
- Allocate and report volume data for each well
- Complete prior-period adjustments for production volumes
- Generate master data reports for production
The ownership feature within the SAP PRA module helps companies set up the partners involved in supporting joint venture accounting processes across the company and industry.
There are four different types of partners that receive payments from oil and gas sales:
- Royalty owner
- Carried interest owner
- Working interest owner
- Mineral owner
Once the partnerships, shares, and ownership processes are set up, the PRA module will allow users to leverage percentages to distribute revenues and link ownership back to both the measurement point and well completion. Each phase in the PRA solution is linked back to the previous one to ensure accurate measurement points are upheld and well completions are reliable.
3) Revenue Accounting
Once the oil and gas is sold, companies are then tasked with outlining and assessing revenue distribution across each partnership, ensuring each partner is paid correctly according to predefined sales contracts and production volumes from well completion.
The revenue solution also integrates with the Joint Venture Accounting (JVA) module, making it easier for users to pay partners, transfer revenue information to and from the JVA module, and handle payment processing tasks through convenience netting.
4) Pricing and Contract Management
Contractual allocation, pricing information, and any other details used to process the PRA ventures are included in the contracts and pricing component of the PRA module.
And, while contracts can get pretty complex, the PRA module simplifies the complicated formulas and supports revenue accounting ventures at any level.
5) Royalty and Tax Reporting
To accurately manage sales reports and other payment processing documents and ensure proper payment to royalty owners, they must send reports that show the total sales volume and the total payment amounts.
The royalty and tax reporting solution in SAP PRA makes it easier for users to calculate total volumes produced, ensure taxes are paid correctly, and tax documentation is completed accurately depending on the type of taxes and the regions the wells are located.
How Can We Help?
Whether you need help implementing new SAP solutions for the first time, additional support navigating connections between all the modules included in the Production Revenue Accounting suite, or just an extra hand facilitating communication and collaboration between users, royalty owners, and other company partners, Surety Systems is here to help.
Our team of senior-level, US-based SAP consultants has what it takes to lead you to success, regardless of the complexity of your organizational structure, the nature of your project needs, or the number of stakeholders involved in making key business decisions.
Getting Started with Our Team
Interested in learning more about SAP PRA or finding the best-fit consultant for your project needs?