Commencing with the 1974 Accounting Procedure, COPAS revised its model forms to eliminate an overhead rate structure that is based on well depth. For producing wells, a shallow well incurs the same amount of overhead as a deep well. They generally require the same amount of accounting, regulatory reporting, and other overhead services. The Operator might incur more overhead costs for drilling or conducting downhole operations on a deep well. Because the drilling rate is prorated based on drilling days, a deep well will recover more overhead dollars, even at though it has the same rate as a shallow well.

These concepts and others are discussed in COPAS Accounting Guideline (AG) 23, “Overhead Negotiation and Calculation.” AG-23 also describes methods an Operator may use to calculate its theoretical break-even cost for providing overhead services. Another resource is COPAS Model Form Interpretation (MFI) 21, “Overhead – Joint Operations.”

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