3 Insights from the 2026 COPAS Spring Meeting
The Council of Petroleum Accountants Societies (COPAS) held its Spring meeting this April in Oklahoma City. Below, Evan Green, an Audit Partner in Whitley Penn’s Midland office and a member of the National COPAS Board of Directors, shares key takeaways from the meeting and what the topics and trends discussed may mean for the Energy sector.
A central theme throughout the conference was the expanding role of artificial intelligence across oil and gas accounting, specifically its applications surrounding vendor audits, revenue accounting, and joint interest billing. How could AI impact these areas, and what is the trickle-down effect on oil & gas operators? Conversely, what are some challenges to consider surrounding AI use? Here’s a breakdown:
Vendor Audits:
AI is moving vendor audits toward a more automated and continuous process. For operators, these capabilities are increasingly being embedded into processes before invoices are paid, enhancing oversight and reducing the reliance on retrospective audit procedures.
Revenue Accounting:
One of the difficulties surrounding revenue accounting has historically been unstructured purchaser statements and inconsistent formats. For operators and working interest owners, AI presents an opportunity to standardize or interpret unstructured statements more efficiently, detect underpayments and deduction anomalies earlier, and improve cash forecasting.
Joint Interest Billing (JIB):
Due to the JIB process being extremely repetitive, AI could reduce manual JIB preparation while increasing accuracy. In the long run, operators could experience improved compliance,audit readiness, and easier turnarounds during asset sales or divestitures.
What to Keep in Mind:
While AI adoption is quickly accelerating, it is important for owners and operators using these new tools to ensure proper cross-checks. The need for oversight remains critical. Notably, one session, “Emotional Intelligence in the Age of AI: Staying Human in a Data-Driven World”served as a reminder that communication, judgment, and professional skepticism remain essential. These skills apply not only to accountants in the industry, but also to others in the space who utilize AI and similar technologies. AI should be viewed as an enhancement to human decision-making, not a replacement. Maintaining that perspective will help ensure continued quality in data, reporting, and operations.
The Emerging Issues Subcommittee meeting was a particularly lively session, featuring case studies and small‑group discussion on topics currently driving audit questions and Energy industry debate, including controllable versus non‑controllable materials, drilling and completion overhead, audit rights with and without an accounting procedure, royalty obligations for vented and flared volumes, and more:
Controllable vs. Non‑Controllable Materials:
Under COPAS accounting procedures, materials are placed into two different categories: “Controllable” or “non‑controllable”. Generally Accepted Accounting Principles (GAAP) require detailed tracking, inventory management, and clear documentation of how all materials are purchased, accounted for, and used. Meanwhile, non‑controllable materials are not required to be broken out in detail on joint interest billings (JIBs). Because of this nuance in JIB requirements, non‑controllable materials may not be tracked with the same level of detail as controllable materials, even while they remain financially material and subject to audits.
For operators, this creates potential risk that certain costs are not being fully captured or allocated for financial reporting. Ultimately, bridging the gap between COPAS and GAAP standards is important not just in terms of compliance, but for operational efficiency, cost control, and financial integrity.
Drilling & Completion Overhead:
Drilling and completion overhead is governed by COPAS Model Form Interpretations (notably MFI‑48). It can often be misunderstood or inconsistently applied, especially where drilling, completion, recompletion, and workover phases are concerned. For operators and owners, auditors may note issues such as incorrect start/stop dates for overhead, overhead charged during suspended or non‑qualifying operations, or improper stacking of drilling vs. producing overhead. Keep an eye on the alignment between AFE phases and overhead type, documentation supporting qualifying days and activities, and whether overhead is charged strictly per the COPAS form incorporated.
Audit Rights:
When a COPAS accounting procedure is incorporated into a JOA, it contractually defines audit rights, timelines, and evidentiary standards. Without it, audit rights default to broader contract and statutory principles, which can increase uncertainty. With COPAS, audit periods are limited and untimely exceptions may be conclusively barred. Without COPAS, audit scope has the potential to be broader. There are fewer protections against stale or informal claims, greater litigation risk and higher dispute costs. Pay attention to whether COPAS is incorporated by reference or as an exhibit, and which version applies (1984, 2005, 2022, or modified).
Royalty Obligations for Vented and Flared Volumes:
Regulatory focus on venting and flaring has increased, and auditors are now reconciling reported gas disposition versus royalty paid, particularly on state and federally leased lands. State land leases generally require royalty on 100% of gross production, including vented and flared gas unless expressly exempted. Private leases vary, but many limit royalty payments to gas that is “sold.” In addition, discrepancies between Railroad Commission reports and royalty statements are increasingly cited in audits. Be aware of lease‑specific royalty clauses addressing non‑sale dispositions and confirm that any exemptions are explicit, not assumed.
The bottom line is that audit exposure is shifting away from subjective judgment andtoward documentation and supportability. If you are able to demonstrate alignment between JOA language, COPAS procedures, field practice, and accounting treatment, you could be better positioned to defend charges and avoid cash leakage. For owners, these topics could represent opportunities to validate cost sharing, overhead recovery, and royalty accuracy.
Several sessions focused on the ongoing modernization of COPAS publications. Many Model Form Interpretations (MFIs) and Accounting Guidelines were written 20–40+ years ago and no longer reflect current operating models, digital accounting systems, modern compensation structures, or evolving audit expectations.
To modernize this, COPAS has embarked on a structured effort through PRUTCOM (Publication Reopening for Updates, Technical Corrections, or Modernization). As a result, documentation standards and interpretations are becoming more aligned with today’s operating landscape.
The impacts on audits are likely to be meaningful. Operators may see more consistent audit outcomes and lower tolerance for vague training charges without purpose and linkage to joint operations. Those with formal incentive frameworks tied to field performance may be better positioned than those relying on generalized allocations. Operators that align internal policies with updated COPAS guidance can help reduce dispute risk, while owners could gain clearer benchmarks for evaluating charges.
Key Takeaway
The themes from the 2026 COPAS Spring Meeting point to a clear shift in oil & gas accounting and audit practices. As AI and data analytics continue to change processes, it is important to invest in clean data, clear documentation, and alignment between JOAs, COPAS guidance, field practices, and accounting treatment. Meanwhile, changing COPAS standards and increased regulatory scrutiny, particularly surrounding materials, overhead, audit rights, and royalties, underscore that “how” costs and volumes are supported now matters just as much as “what” is billed, creating potential opportunity for operators and owners who stay proactive. Overall, human skills like judgment, critical thinking, clear communication, and emotional intelligence can make navigting these shifts easier.
Questions? Click here to connect with Evan.
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About COPAS
The Council of Petroleum Accountants Societies, Inc. (COPAS) is a professional organization comprised of the oil and gas industry’s most knowledgeable and influential accounting professionals. Established in 1961, COPAS is often looked to by many governmental agencies for assistance in drafting procedures and rules. COPAS provides expertise for the oil and gas industry through the development of Model Form Accounting Procedures, publications, and education. They are a forum for the active exchange of ideas which result in innovative business and accounting solutions.
