Avatar 400 Energy Solution

Avatar 400 is an accounting system specifically used on the IBM AS/400 Operating System. This modular based solution is capable of handling every financial need that arises as a result of your involvement in the petroleum industry. This modular product has many applications (all of which have descriptions below). The applications listed are all met by implementing the following modules are all found in the following modules:

• Accounting/Financial Management
• Land Management
• Production Management
• Inventory
• Payroll
• CDEX
• Crude Oil Marketing
• Gas Marketing/Control

Video Oveview

Accounts Payable

The Avatar400 accounts payable function reads the general ledger detail for inquiry purposes. Any report and inquiry screen will be tied to the general ledger. All reports and inquiry screens reflect the information as current as the last posting of invoice batches. The accounts payable function gives you the ability to:

• Perform accrual or cash based accounting
• Allow you to automatically tie all reports to the general ledger
• Choose to pay invoices partially or completely
• Setup the automatic validation of information as it is entered based on user defined edits
• Detect duplicate invoices from defenders
• Store and view a detailed history of information
• Enter 8/8ths or net amounts, when entering invoices for outside operated properties; this will then allow the system to determine if the ownership percentage used by the operator is the same as the DOI you set up within Avatar.
• Setup recurring monthly invoice capabilities
• Open payables reports by vendor, G/L date, and property

Accounts Receivable

In the Avatar Accounting System, the accounts receivable module, like the payables module actually reads the general ledger detail for the information it prints on reports and for inquiry purposes. All reports and inquiries will be tied to the general ledger. All reports and inquiry screens reflect the information as current as the last posting to the general ledger. The accounts receivable system gives you the ability to:

• Decide whether to use a balance forward or open item system
• Perform an inquiry by owner and/or property
• View detailed or summary aging reports. Additionally you can perform aging by the number of days or by month
• Setup automatic updates when cash receipts are posted; or journal entries or JIB is processed
• Use one of four different types of accounts receivable: Revenue, JIB, AFE, and Other
• Compile detailed owner statements or statements in summary by property
• Manually adjust interest charges by owner

Budgeting

Budgeting in Avatar 400 can be done for G&A or property related charges. All budgets within the system are maintained by fiscal or calendar year; and can be copied from one year to the next. You are given the option of showing budgeted amounts on a monthly or annual basis. All reports associated with budgeting are user defined.

Depreciation

To aid in your fixed asset management Avatar400 features a detailed depreciation system. This system allows for book, tax, ace, and alternative tax methods. You can also choose to have the system automatically create asset records when extracting entries from the general ledger, or to manually create them yourself. Additionally the system can analyze the 40% rule and perform any necessary reprocessing. Finally, if the depreciation methods within Avatar400 do not satisfy your needs; you can choose to define your own depreciation methods.

General Ledger

The Avatar400 general ledger allows you to keep 12 months open at a time. Additionally, you can keep another 12 months prior to the last closed accounting period. Once you close an accounting period, you can open it up again and make adjusting entries. This is done by simply changing one corporate control record. These prior period adjustments can also be made into closed fiscal years. Transactions older than 12 months are moved into the G/L history files; they can then be inquired into, or printed on history reports. Upon making entries into the general ledger, the system automatically calculates your company’s share of the expenses, allowing you to run reports at any point in time. With this module you have the ability to:

• See entries at the detail or balance level
• Keep two years of detail in the current general ledger detail file
• Balance records from inception-to-date
• Create multiple reports, with the flexible reporting capabilities found in Avatar400
• Keep multiple accounting months open at the same time
• Make prior period adjustments into current or closed years

Inventory

The Inventory module of Avatar400 maximizes your ability to control your costs. This system can effectively track all of your equipment and supplies. This system allows you to easily find the location and quantities of all of your equipment. This system can help your business by:

• Controlling stock items by category and stock numbering
• Storing all vendor catalog information on line
• Automating journal entries for financial recording
• Using tax tables
• Implementing a purchase order system tracking and printing system.
• Allocating stock items to properties
• Enabling material transfers
• Integrating with accounts payable to automate many functions
• Providing a complete equipment history by property/warehouse/yard
• Automatic calculation of inventory vs. physical counts
• Tracking stock on hand with condition and back orders

Joint Interest Billing

The joint interest billing process in Avatar400 can be run as many times in a month as you desire. When running the Joint Interest Billing process, only entries that have not been disbursed (at the time of running) will be selected. The Joint Interest Billing process automatically updates accounts receivables when it is run.

The JIB system will:

• Print a detailed invoice for each own and each property they participate in.
• Print a summary statement for each owner, showing all the properties they are involved in.
• Allow you to setup multiple divisions of interest for expense groups defined by you and your staff.
• Allow you to suspend JIBs for legal or minimum amount reasons.
• Allow you to net JIBs against the revenue by property or in total for all properties
• Allow you to provide a 150 character description for each entry on the JIB
• Take entered prepayments and apply them against the JIB by types of charges
• Automatically reverse expenses entered to the wrong division of interest, to the correct one; regardless of whether or not the charges have been billed
• Allow you to hold charges in Work-In-Progress until you decide to bill it out on completion.

Land Management

Accompanying your involvement in the Oil and Gas industries is the need to buy or lease, and manage land. Land is a vital asset when it comes to your industry, and oftentimes the need to use multiple properties causes problems. The Land Management system in Avatar400 is used to effectively control a complex land management environment. The system consists of three parts: the Lease Master Record, the Land Management Inquiry SubSystem, and the Contractual Obligations System.

Lease Master Record You can enter lease information into the lease master record providing you with a single storage space for you to completely all of your pertinent leases. Leases are entered through 16 different screens, only the first 3 of which are required. All leases are assigned seven digit numbers for posting in the accounting system; additionally a 30 character name field and an 18 digit lease reference number are used. All of these fields can be used to search for the lease. Payments generated within the Land Management System are automatically updated and posted in the accounting system.

Land Management Inquiry Subsystem This system allows you to search, sort, and view leases on one of 32 different dimensions. An example of some of these are: Primary Name & Address, Well to Unit, Units, Wells, Districts, Prospects, Fields, Region, Country, Units to district, Lease by Country, Lease by Lessor, etc.

Contractual Obligations System The Contractual Obligations System provides you with one-point storage for all of your contractual obligations. There are 6 screens prompting you for information when entering a contract; however like the Lease Master Record, not all are required. Inquiries can be made into the contract database as well.

Payroll

This application of Avatar400 allows you to calculate and distribute payroll checks. Integration with the accounting package allows you to tie payroll data to your accounting information. The Avatar Payroll System allocates payroll costs that are often unrecognized to the appropriate department. These expenses include FICA taxes, workers’ compensation taxes, Medicare, and unemployment. Your managers are then able to track where all of your payroll dollars are allocated. To meet regulatory standards, you can use the magnetic media filing capability to file W-2s and 1099s. This system will help you by:

• Balancing and accruing data through integration
• Providing on-line inquiries for detailed monthly and year-to-date information at the employee and company levels
• Generating bills through the accounting system’s joint interest billing mechanism
• Withholding 401K data and recording percentages for withheld data
• Supporting before and after tax deductions, including federal taxes, FICA, Medicare, and state and local taxes
• Keeping a history of earnings reports.

Production Management System

With Avatar400’s Production Management System you will be given the required tools you need to properly run your business. The versatile sorting features allow your staff (engineers, geologists, managers, etc) to gather the production data their specific field requires. Using this data, your staff will be able to make better decisions, more quickly. Streamlined data entry reduces the amount of time your staff spends entering data, effectively freeing up hours of time. The system then automatically tracks the production data of oil and gas; and generates production reports. This system will allow you to:

• Balance and accrue data through integration
• View multiple, on-line inquiries of production data
• Automate governmental operators’ production reports
• Analyze production downtime
• Integrate production charts
• View volume variances with run tickets, meter tickets, run statements, and revenue checks.
• View production history downloaded to personal computers

Report Writers

Avatar400 features both property and financial report writers; as well as many additional report writers incorporated into the individual applications.

Property Report Writers All report writers are completely user defined. The property report places the names and numbers in the left column, the remaining 15 columns can have any data you desire collected in it. The report will print one line per property, with the ability to use the hierarchical features to roll-up. Reports can be printed to paper or to a file on your PC. All revenue amounts can be printed in dollars or columns (or both).

Financial Report Writers The financial reports, like the property reports, are also completely user defined. You are able to decide what order the accounts are printed, and where headings and totals are inserted. Each corporation can have up to 99 formats, allowing you to, for example use one format for in-house, one for the bank, and one for auditors. Financial reports can be printed for individual corporations or a consolidated list of multiple corporations. Each report can contain up to four different periods, each appearing as a separate column on the report allowing for comparisons. Reports can be run for any accounting period past or present.

The following reports can be printed through other applications of Avatar400

• Detailed general ledger
• Trial balance
• User defined Subledgers
• Open Payables report by vendor, property, or general ledger date.
• Cash requirements report
• Aged accounts payable report
• Totals by individual
• Detail by individual
• Reports that cut off by general ledger date
• Statements in detail
• Statements by individual, by property
• Sales Ledger
• Revenue analysis
• Revenue suspense
• Backup withholding report
• Escheat reporting
• Allocation report
• Suspense report
• Prepayment report
• G&A budget vs. actual report
• User-defined property budget vs. actual report
• 12 month budget report
• AFE reports by general ledger or occurrence date

Revenue Accounting

This module allows you to automatically accrue revenue for all properties monthly. The System accrues revenues for properties at the purchaser level. The accrual is automatically generated if payment has not been received for a production month. Accruals can be automatically reversed from month to month. They use actual sales volumes from Avatar’s Production Information Management System. If sales volumes are not available, a moving average of the last three, two, or one month’s sales volumes is used to generate the accrual. Prior months’ accruals are reactivated in the current accrual month if payment for the prior months has not been received.