Overview of Joint venture accounting solution in SAP Oil & Gas

1. my SAP ERP
Joint Venture Accounting(JVA)
Oil & Gas Industry – Upstream solution

2. Oil & Gas
© SAP 2008 / Page 2

3. Why SAP JVA?
 SAP JVA is the only SAP solution that allows you to track venture
expenditures on a venture by venture and partner by partner basis.
 SAP JVA is fully integrated with:
Financial Accounting (SAP FI)
Controlling (SAP CO)
Asset Management (SAP AM)
Materials Management (SAP MM)
Production Planning (SAP PP)
Plant Maintenance (SAP PM)
Project System (SAP PS)
allowing you to capture all joint venture transactions by using
standard SAP functions.
 The result is a streamlined workflow and reductions in errors.

4. Why SAP JVA?
 Using proven SAP FI-Special Ledger functionality as its basis, SAP
JVA ensures accurate calculations and reporting of venture activities
on a venture-by-venture basis.
 SAP JVA supports joint audit data exchange (JADE) reports, online
and in real time, reducing audit headcount, time, and expense.
 SAP JVA ensures full compliance with all standard overhead
methods and calculations (US and international).
 SAP JVA provides complete drill down capabilities for reporting all
ventures, all authorization for expenditures (AFEs) tied to JOA's,
overhead analysis, cutback, and billing.

5. SAP JVA Features and Benefits
 Detailed joint venture data capture in real time
 Cash calls to/from partners
 Partner billing for venture expenses and revenues
 Overhead calculation, based on the Joint Operating Agreement
Allocations of billable and non-billable costs
 Multi-currency processing
 Farm-in/farm-out and equity changes
 Real-time gross/net venture reporting

6. JVA Business Objects: Venture
Venture A
EQTYPE 1
Engineering
Design
EQTYPE 2 EQTYPE 3
Construction Production
A
2002
2003
33 1/3 B
C 33 1/3 33 1/3
33 1/3
EG1
A B A B
50 % 25% 50 % 25%
D C
25 % 25 %
EG2 EG4
Ventures associate
Equity Types and Equity
Groups to define a specific
joint operation or purpose
2004
A
75 %
EG3
C
25%
A A
25 %
33 1/3 B D B
C 25%
33 1/3 25 %
33 1/3 C
25 %
EG5 EG6

7. Joint Venture Integration with Cost Objects
New Processing Plant
Cost centre
Valid
EQTYPE 1
Design
A
33 1/3 B
C 33 1/3 33 1/3
33 1/3
EG1
A B
Venture A
EQTYPE 2 EQTYPE 3
Construction Production
A
Construction Project
Project
EQTYPE 1
Engineering
Design
A
33 1/3 B
50 % 33 1/350 % B
D 25% D 25%3
25 % 25 %
EG2 EG4
A A A25 %
A C B D B
75 % 25% C 33 1/ 25 % 25%
33 1/3 C25 %
EG3 EG5 EG6
Venture A
EQTYPE 2 EQTYPE 3
Construction Production
C
33 1/333 1/3
33 1/3
EG1
Valid
A
50 %
D
B
25%
A
B
50 % 25%
C 3
25 %
EG2
A
A C
75 % 25%
EG3
25 %
EG4
A A25 %
33 1/3 B D B
C 25 % 25%
33 1/3 33 1/ C25 %
EG5 EG6

8. Joint Venture Integration with Cost Objects
Cost Center Internal Order
Asset
Project
Venture
PM Order
Plant
1 2
Prod Order

9. Joint Venture Coding for Cost Object
Cost Object
Project Cost centre Internal Order
Plant Production Network
Maintenance Order Order
Order
Joint Venture
Equity Type
Recovery Indicator
JV Object Type
JIB/JIBE Class
JIB/JIBE Subclass A

10. Recovery Indicator
Identifies category of a joint venture transaction
Indicates whether a particular revenue or expense is shared by
venture partners
Used to select data for reporting to venture partners
Used to distinguish between joint and own revenues and
expenditures
Recovery indicator assignment & determination:
FI CO MM
User Entry
Document Type
G/L Account &
Cost Element
Cost Object
Default
(Corporate)

11. Joint Venture Integration and Interface
Joint Venture Document
CO
PS
HR
FI MM
Accounting
Interface
AM
SD Itm Account Cost Obj. Venture EqG RI Amount
PM 1 Vendor CC-1 JVI001 A01 BI - 70.50
1 Vendor CC-2 JVI002 A01 BI - 47.00
2 Cost 1 CC-1 JVI001 A01 BI 60.00
PP
3 Cost 2 CC-2 JVI002 A01 BI 40.00
4 Tax CC-1 JVI001 A01 BI 10.50
4 Tax CC-2 JVI002 A01 BI 7.00
Accounting Document
Itm Account Cost Obj. Amount
1 Vendor -117.50
2 Cost 1 CC-1 60.00
3 Cost 2 CC-2 40.00
4 Tax 17.50
FI DATA
GLT0
JV Interface
JV DATA
JVT01
Special
Ledger
Interface
BILLING CUSTOM
JVT02 DATABASE

12. Joint Venture Asset Posting - Example
JVA derives venture coding for an asset using the cost
centre entered on the asset master record Asset Master
Vendor Invoice
JV Document
Asset Document

13. Joint Venture Material Posting - Example
JVA derives venture coding for material movements from a special stock cost object that is assigned to
a plant and a valuation type (which is optional) associated with the plant.
Goods Receipt
MM Assignments
Material Document
JV Document
Accounting Doc JV Document

14. Joint Venture Vendor Invoice Posting - Example
The expenses are assigned to the JV partners via the cost centre assigned to the expense line items
Post Vendor Invoice
Accounting Doc
Cost Centre Assignment
JV Document

15. Periodic Processes
Foreign Currency Valuation
Cost Transfers
Cost Allocation & Settlement
Overhead Calculations (PCO)
Equity Adjustments
Cutback
Joint Venture Close
Partner Netting Final Settlement Billing
Corporate Close

16. Assessments & Distributions
Cost allocations are based on R/3 CO functions with JVA required enhancements,
including:
 Substitution of the recovery indicator (recovery indicator manipulation)
 Allocation of secondary costs
 Re-run of settlement
Distribution (through original cost element)
Internal CO only
Cost Object B
Materials
Internal Labour 40
External Labour 80
Staff Salaries
Rent & Rates
Unallocated Costs
Cost Object A
Materials
Internal Labour
External Labour
Staff Salaries
Rent & Rates
100
200
Allocation (via secondary cost element)
Internal CO only
Cost Object B
Materials
Internal Labour
External Labour
Staff Salaries
Rent & Rates
Light & Heating
Vehicles
Repairs & Servicing
Travelling 8
Hotels 12
Entertaining
Telecoms
Mail & Carriage
Total 140
40% Light & Heating
Vehicles
Repairs & Servicing
Travelling
Hotels
Entertaining
Telecoms
Mail & Carriage
Assessment A
Total
20
30
- 350 40%
0
Light & Heating
Vehicles
Repairs & Servicing
Travelling
Hotels
Entertaining
Telecoms
Mail & Carriage
Assessment A 140
Total 140

17. Equity Changes & Adjustments
Farm-In / Farm-Out
A partner joins or leaves a venture
Redetermination
 Partner shares are adjusted to reflect changes in business conditions, such as reserves
Funding Currency Change
A funding currency is added or removed from a venture
Current and prior period equity adjustments handled

18. Suspense Processing
Suspense functionality supported for:
Partner Suspense
Equity Group Suspense
Project/WBS Element Suspense
Specific costs are not charged to a venture but instead posted to
suspense accounts for the duration (year & period) a project remains
in suspense
Set project in suspense
Project Suspense
Selection
Company Code GBU1
Venture JV0001 to JV9999
Posting
Fiscal Year 2002
Period 12
Posting Date 31.12.2002
Options
Test run
Post Costs
Accounting Document
Itm Account Cost Obj. Amount
1 O'head Admin - 50.00
2 O'head CC-1 50.00
Joint Venture Document
Itm Account Cost Obj. Venture EqG RI Amount
1 O'Head Admin C00001 A01 NB - 50.00
2 O'Head CC-1 JVI001 A01 BI 50.00
JVA Project Suspense
Joint Venture Document
Itm Account Cost Obj. Venture EqG RI Amount
1 O'Head Admin C00001 A01 NB - 50.00
2 O'Head CC-1 JVI001 A01 BI 50.00
3 O'Head CC-1 JVI001 A01 BS 0

19. Cutback Processing
Gross
The cutback process
allocates JV partners'
expenses or revenues
Operating
Exp / Rev
100
Cost Object
RI = Bill
Venture A
Venture A
ET1 Company Code
according to their
working interest ownership.
Cutback EG2
50 % Partner B
25 %
Partner D
25 %
Net Operating
Exp / Rev
50
AR / AP
Partner B
25
AR / AP
Partner D
25

20. Cash Call Processing
Equivalent to down payments or pre payments
Can be issued for future months (Reclassification)
Request and cash receipts carried forward to billing process
Integrated with Accounts Receivable and Accounts Payable
Cash Call Request:
Gross to venture/project
FI
Net to venture/project/partner
Partner Shares
Venture JV0001 EqG A01 FCurr NOK
Partner FCurr Amt Lcurr Amt
JVGBU1 600.00 46.74
JV5001 300.00 23.37
JV5101 100.00 7.79
Document
Cash Call
Accounts
Accounts Rec.- Cash
Rec.- Cash Calls
Calls
Partner C
Partner A 100
600
Accounts
Rec.- Cash
Calls
Partner B
300

21. Joint Venture Billing
Vendor
Invoices
Internal
Allocations
Accounts
Receivable
…
Cash Calls
Payroll
Orders
Costs
JV Integration Mgr.
…
JV Summary
Ledger
Cutback
JV Billing
Ledger
Partner
Adjustments
JV Integration Mgr.
Cutback
Invoice
JV Billing creates
various customized
billing documents to
send to your JV
partners
Billing
Statement
Exp. Suppl
Expenditure
Detail
Inv. Suppl
Detail
Invoice
Paid Cash Partner
Calls Payments

22. Inter-Company Ventures
Affiliated Inter-Company Setup
FI
Document
Cutback
To Affiliate:
INVOICE
Intercompany
Processing
Cash Call
Cash Calls
CO
FI
A/P
Cutback creates A/P entries
to operator on the books of
the affiliated partner as
configured in SAP JVA and
SAP FI
Gross cash calls create A/P
entries on the books of the
affiliated partner, as
defined in configuring SAP
JVA and SAP FI

23. JV Partner Auditing
Standard JVA Reports:
Gross billable/all by venture/account
Gross billable/all by cost object
Gross billable/partner net by cost object
Gross billable/all by cost object foreign currency
Gross billable/partner net for JIB
Billing Reconciliation Extract:
Remaining cutback by cost object
Posted suspense overview
Gross non-operated by cost object
Venture/equity group/billing indicator
Partner/billing indicator
Reconciliation
Statement
Exp. Suppl
Expenditure
Detail
Inv. Suppl
Detail
Invoice
Ledger 4B and 4D
JVA Billing
Balances
Ledger 4A and 4C
JVA Balances

24. Non-Operating Ventures
Online transaction for incoming invoices for non-operated ventures
 Input forms, defined in JVA configuration, control the layout of the input screens
 Input form includes the SAP coding block information (account, cost object,
asset)
Incoming cash calls are handled with the cash call functions
Non-operated venture processing is fully integrated with SAP
accounts payable functions
Invoice
Accounts
R/3
Cash Call
Payable
Non-
operating
net share

25. SAP JVA Business Benefits
Provides an accurate accounting and reporting tool, with real-
time information on any partner or venture
Flexibility to handle business changes - retroactive equity
change handling, flexible master data and customizing
Full integration with SAP core processes provides:
highly automated JVA processing
ease of use for users
full document drill-down & tracking, historical data and audit
trail
End-to-end integrated business process coverage ensures:
streamlined cash call and joint interest billing processes
greater efficiency in billing partners- shortening the cash flow
cycle
faster month end closing and financial reporting at lower cost

26. © SAP 2007 / Page 27
Customer Success Stories

27. Questions?

28. THANK YOU