SherWare Oil & Gas Blog

Is Ohio’s proposed severance tax rate increase fair?

Posted on May 17, 2012 by Mallory Schlabach

Ohio’s Governor John Kasich’s proposal to raise the state’s severance tax against the oil and gas industry 4 percent over the next three years is stalled at the Statehouse amidst heated debate between industry critics and those who support the oil and gas industry.

I’ve recently read articles and opinions on both sides of the spectrum and honestly, feel like I’m missing something to see the whole perspective correctly. Before we break down the two views here, understand the current severance tax rates in the state and what is proposed.

Severance taxes are collected based on extraction of natural resources from Ohio soil or water. Currently oil and gas producers pay $.03 per MCF of natural gas and $.20 per BBL of oil (which is currently around 1 percent).

Kasich’s proposal is to slowly raise the severance tax rate to 4 percent over the next three years – bringing in an estimated $973 million to be used for income tax cuts statewide.

Ohio Oil & Gas Industry view:

The Ohio Oil & Gas Association immediately came out swinging against the proposal when Kasich announced it, countering that it will make for a bad business climate in the state and drive away potential investors that could boost the state’s drilling in newly-discovered Utica shale.

The Association also released a fact sheet about Ohio severance taxes and included this chart comparing the severance taxes of four surrounding states to Ohio. You can see that Ohio falls in the middle in regards to the percentage or amount that producers have to pay based on the minerals extracted.

According to OOGA’s fact sheet, both West Virginia and Michigan, who have higher severance tax rates, have seen decreased oil and gas investment and drilling in the past five years since, while Pennsylvania, which has no severance taxes and only an impact fee for drilling, has seen a 600 percent increase in drilling.

OOGA also counters that in 2008 Arkansas implemented a similar increase in state severance taxes and has since seen drilling activity decline by 50 percent.

While the Governor claims that the industry doesn’t pay enough in taxes and that this tax increase will boost the economy – the industry adamantly claims that’s not the case.

Because the Utica shale is in its infancy, it will take several years to determine the viability of the formation, said the Association. If the cost of doing business becomes too high before enough investors can invest in the new shale play, they will take their investments somewhere else.

The Governor’s view:

Kasich – who’s largely known for his ability to cut budget and close deficits – has proposed a fairly modest increase in the severance tax if you look at Texas and Oklahoma, which both have a 7 percent or higher rate, and Michigan and Pennsylvania, which both have 5 percent or higher.

At an Ohio Energy Jobs Summit a few weeks ago Kasich was quoted by the Associated Press as saying, “I don’t want all this money to escape Ohio. And our severance tax is going to be at a level that will allow us to be very competitive and it will allow us to reduce our income tax in the state and benefit all families.’’

This is how Kasich’s website describes the tax: “As Ohio oil and gas production increases, so will the income tax cut for Ohioans. Every cent – 100 percent – of new tax revenue from the high-volume horizontal wells like those used in Ohio’s Utica and Marcellus shale formations will be used to reduce income taxes the following year.”

From this perspective, it looks like it will only apply to new wells drilling with a horizontal well – which won’t affect smaller producers across the state that only use vertical wells when drilling. And from this quote – of him putting what he says the tax into perspective – it also seems like a fair tax he’s proposing:

“This is what the oil companies in Ohio are paying in tax on a $107 barrel of oil — 20 cents. I’m not kidding you. Do you understand what I just told you? This is what they pay for taking oil out of our ground and selling it to you, by the way, for $4.30 a gallon,” Kasich said.

My problem with hearing Kasich’s side of the story is that I seem to be missing where the truth lies. I understand that with extreme views you have to take them with a grain of salt. What I would like to hear from the Ohio producers is how this proposed severance tax will really affect you. Reading about it on paper it may not look so bad – but when you see how it works with real numbers, real wells, real lives, it can be a different story.

What will the proposed severance tax increase do for your company? If it passes, do you see it slowing down the drilling in the state?

Posted in Challenges Oil and Gas Industry Faces, Investing in Oil & Gas, Oil & Gas Industry, Politics and Oil & Gas Industry, Uncategorized | Leave a comment

Idaho jumpstarts oil, gas industry and leaps ahead with new regulation

Posted on May 15, 2012 by Mallory Schlabach

Idaho, a state with, until recently, no active oil or gas wells, is officially a state with a new industry and top-tier regulations – putting it at a great advantage to move forward amid the fracking debate wracking the nation.

Idaho map shows where natural gas wells found natural gas commercially viable

In 2010, Bridge Resources and a partner company, drilled seven exploratory wells and found that natural gas was viable to be commercially produced in the state. However, the company ran into problems with some of its other properties in the North Sea and debts to several banks – halting the project.

Since then, Snake River Oil and Gas, a local oil and gas operator, and AM Idaho, a Texas-based exploration and production company, have joined forces to acquire most of the assets Bridge Resources left behind to move forward in creating a natural gas industry in the state – and conceivably more revenue, jobs and hype to the area.

Statutes and regulations had been in place and adapted from the Interstate Oil & Gas Compact Commission in case oil and gas were found to be viable in the state, said Suzanne Budge, Idaho Petroleum Council Executive Director. But with a flurry of new activity coming to the area and active wells being permitted, Idaho’s Department of Lands began a thorough review of the bare-bones regulations and set about through the state’s rule-making process to redefine the oil and gas drilling process.

What seemingly should have been a quick process because the land leased for drilling will require conventional drilling to a 3,000 – 5,000 foot target, turned into a much larger affair thanks to the nation’s hype over hydraulic fracturing.

In the end, reading through the state’s regulations recently passed, the long process will end up giving the state a leg up in the regulations battle that most of the other states are going to have to start bracing for if the EPA gets its way soon.

The temporary regulations approved on April 19 include specifics such as:

- All drilling applications will be denied unless they include: source of water, trade name and content of fluids, type of proppants, estimated pump pressures, method for the storage and disposal of well treatment fluids, size and design of storage pits, expected fracture length both horizontal and vertical directions, groundwater protection plan and information specific to hydraulic fracturing.

- Certification by professional engineer that all aspects of the well construction, including suitability and integrity of the cement used to seal the well meet requirements

- Integrity testing of the well casing or casing-tubing prior to well stimulation, detailed information to the Commission for each stage of the well stimulation of chemical additives, compounds , concentrations or rates proposed to be mixed and injected including the additive type, chemical compound name and Chemical Abstracts Service

In turn, the applicant can request in writing confidentiality be provided for trade secrets to protect the specific solutions used in fracking.

From the regulations and code regarding oil and gas for several other states that I read through, Idaho is ahead of the industry as far as tackling the sticky subjects of hydraulic fracturing and water contamination.

How different is their regulation than in your state? What do you see changing in your state’s regulations in the future? Will it help or hurt?

Posted in Challenges Oil and Gas Industry Faces, Hydraulic Fracturing, Oil & Gas Industry | Leave a comment

SherWare Clients offer predictions for oil & gas industry

Posted on May 10, 2012 by Mallory Schlabach

Last November I asked our clients to give me three predictions for what would happen to the oil and gas industry and economy during 2012. The following 21 predictions are a compilation of the most popular prediction topics our clients sent in.

We will follow these predictions throughout the year to see how they pan out and how accurate you guys can see the industry’s future. 2012 Oil & Gas Industry Predictions

General Oil & Gas Industry

The industry will be stable for 2012. You will see more of the same from 2011. There will by more shale plays, more debate about hydraulic fracturing and more regulation. – Pete Clute
Growth in the Marcellus drilling will be less than the growth in Utica drilling because of the liquids/gas ration being 30:1 in value. – Mark Swisher
The gas industry will grow exceedingly fast with the Marcellus shale. I’m not sure wht they will do to the little guy and his vertical wells. – Carol Watkins
I predict they will allow us to drill in Alaska in 2012. – Kimberly Ann

Prices

Prices will increase for the general public. A combination of turmoil in other parts of the world and the backlash from the current administration’s clampdown of our own energy independence will drive the production, delivery and therefore user end costs up. – Tonya Aiken
As shale production increases, gas prices will continue to decline. Pipeline capacity may become a problem. – Holly Clemens
Oil prices will continue to creep up with a possible spike when Israel takes on Iran’s nuke program. Most of the creep will be declining dollar value and flight into commodities. – Mark Swisher

Hydraulic Fracturing

I don’t anticipate any significant regulation change during an election year. While there is a lot of noise about hydraulic fracturing, it is essentially the same method that has been used for years. Some states may implement tighter controls or regulations, but most states will allow it to continue as is. It will ultimately be a state by state issue. – Guthrie Chamberlain
Frac technology will contine to improve and also prove that it is NOT a danger to the environment. – Don Lindberg
The hydraulic fracturing debate will continue. I don’t think a law will pass banning the practice, but it might be met with some debate on the topic of water conservation. We might see some new ideas and industries created to clean and reuse the water. – Tonya Aiken

Alternative Energy

Most green energy initiatives will remain cost prohibited and an impractical alternative to current energy supplies. This will not change anytime soon as newer technologies in the exploration and extraction of current oil and gas supplies will allow the use of fields that were not previously cost effective. This is why the Bakken and Marcellus are available today and will play a significant role in the US energy supplies. – Guthrie Chamberlain
Despite pushback from the liberals/environmentalists, there will be movement to establish more infrastruction for natural gas vehicles. – Don Lindberg

Miscellaneous Predictions

Offshore drilling permits won’t increase as much as we’d like. Obama will be trying to appease the Democrats so he can be re-elected. – Pat Johnson
The Bakken fields will produce as expected but the frenzy to drill will slow down and level off. – Juli Pierce
The U.S. will continue to NOT have an effective energy policy by the end of 2012. – Kathy Pritchard
Texas leads the nation in oil production, representing almost 50 percent. I predict this number will fall in 2012 because of the Bakken fields and Marcellus shale. – TJ Hunter
Conventional drilling will slow to a record low number of wells due to gas prices and the Utica Shale frenzy. – Mark Sparr
The regulations will force small independents out of business as only the huge companies will be able to comply. – Mark Stephenson

Ohio Oil & Gas Industry

Despite continuing misplaced criticism of the industry and hydraulic fracturing, Ohio’s governor and ODNR will allow the industry to steadily improve our economy. The eastern half of the state will continue to benefit even though it might not be part of the media storyline. – Holly Clemens
The Utica Shale will cause unprecedented hype and will commence the beginning of the end of the local oil and gas producer. – Tom Csapo
Utica Shale exploration and development will dramatically increase in both the wet gas and oil areas of the state. – Ed Mack

What do you think about their predictions? Are there any others you would add about the industry now that you’ve seen how the first four months have played out?

Posted in Challenges Oil and Gas Industry Faces, Energy Future, Future of Natural Gas, Hydraulic Fracturing, Oil & Gas Industry, SherWare Client | Leave a comment

President Obama becomes newest fan of oil and gas industry

Posted on May 8, 2012 by Mallory Schlabach

You know it’s an election year when President Obama does a 180 degree turn of opinion regarding the oil and gas industry in less than 18 months. Two weeks ago three federal agencies announced their partnership to work on the development of unconventional domestic natural gas thanks to an Executive Order from President Obama.

The new interagency, comprised of the U.S. Department of Energy, the U.S. Environmental Protection Agency and the U.S. Department of Interior, is called the Interagency Working Group to Support Safe and Responsible Development of Unconventional Domestic Natural Gas Resources. Phew, what a mouthful. Essentially it means these three government departments will be forced to work together to coordinate current and future research and scientific studies to ensure there is a continued expansion of natural gas and oil production safely and responsibly here in America.

According to a press release from the Department of Energy, “As the President has made clear, domestic natural gas and oil resources will continue to play a key role in America’s energy future. Already, technological advancements like hydraulic fracturing – innovation supported by public research – have allowed development of previously uneconomical natural gas and oil deposits.”

The release further goes on to point out that U.S. oil and natural gas production has increased each year since 2008 (note, since President Obama took office) to reach its highest level in 8 years in 2011. I think if you asked those in the industry, they would say that the United States has had high domestic oil and gas production since 2008 in spite of President Obama’s attempts to sabotage the industry.

Department of the Interior Deputy Secretary David J. Hayes is quoted as saying, “… We are positioning the Obama administration to best meet the critical need of increasing public understanding and public confidence of these critical technologies so that we can continue safe and responsible exploration and production for many decades to come.”

If I had told you in 2011 that President Obama would have created an Interagency with this much support for hydraulic fracturing and domestic production of oil and natural gas, no one would have believed me.

Let’s stroll down memory lane to the post I wrote regarding his lackluster State of the Union address in January 2011 to see how he felt about domestic oil and natural gas production then.

“We need to reinvent our energy policy. I offer a challenge to America’s scientists and engineers. If you can assemble teams with the best minds in your fields and focus on the hardest problems of clean energy, we’ll fund the Apollo projects of our time,” President Obama said towards the beginning of his address.

“With enough research and incentives we can break our dependence on oil with bio-fuels.”

President Obama went on to end his little bit about energy saying this:

“Instead of subsidizing yesterday’s energy, let’s invest in tomorrow’s. Let’s set a new goal that by 2035, 80 percent of America’s electricity will come from clean energy sources.

Perhaps President Obama forgot when he created this Interagency, but 2035 is only two decades away. I didn’t see anywhere in his State of the Union address about his love for the critical technology of hydraulic fracturing to leverage the hard-to-reach-and-make-economical shales that he’s desperate to pull on board for votes this November.

Ironic? I think not. Perhaps he’s banking on the oil and gas industry forgetting last year’s zeal, shoot the past three years’ zeal to punish the industry and his promise to fund his pet clean energy projects by “asking Congress to eliminate the billions of taxpayer’s dollars we are giving to the oil companies. In case you haven’t noticed, they are doing just fine without our help.”

Sorry, Mr. President. I don’t believe the industry has forgotten. It looks like you can do just fine without our help in November.

Posted in Challenges Oil and Gas Industry Faces, Energy Future, Future of Natural Gas, Oil & Gas Industry, Politics and Oil & Gas Industry | Leave a comment

Rising gas prices here to stay

Posted on May 3, 2012 by Mallory Schlabach

For the first time in nearly three years, gas prices at the pump haven’t risen significantly year-to-year. If you remember my post from this time last year, I wrote how prices had crept up to nearly $4 per gallon nationwide.

From 2009 to 2011 prices rose by an average of 65 cents per year, according to GasBuddy.com, and only varied by 5 cents between 2011 and today. While my wallet may still be protesting the cost of gas, I am somewhat mollified that it could be much worse today, if the past three years are any indication. Perhaps, I’m resigning myself to the idea that gas is just going to be higher and that’s that.

I read an article recently on Louisiana’s Oil & Gas Association’s blog about cheap gas being a thing of the past, and it was reinforced when I was browsing the Internet today and came across the Debate Club, a site where great minds in our society today debate relevant topics and readers vote for the most compelling argument.

On the topic Is Obama to blame for high gas prices, most readers sided with Daniel Simmons, Director of State Affairs at the Institute for Energy Research that yes, the administration has done little to reduce oil prices.

I, however, found that Severin Borenstein’s, E.T. Grether Professor of Business Economics and Public Policy at U.C. Berkeley’s Haas School of Business, argument that we must prepare the world for higher gas prices resonated much deeper.

He argued that the while it is easy for the public and politicians to blame the President for rising gas prices – in reality, there is little that a President can do to change the prices.

Even if the United States was to increase domestic production (which I do believe we should do, but not necessarily because it will lower the price at the pump), it would only put a dent in the supply and demand chain – leaving prices at around the same that they are.

Borenstein contends that growing demand in China and India, as well as the fact that the actual physical supplier of most of our oil, Saudi Arabia, holds more spare capacity than America could if all federal lands were open to be drilled in the next decade, are to be held responsible for rising prices – and both are factors that won’t be easily changed.

Gasoline is what fuels America – literally and figuratively. According to the Federal Highway Administration’s website, Americans drive on average, 16,550 miles per year which is equivalent to four roundtrips from New York City to Los Angeles.

Our fuel consumption isn’t going to slow down overnight and unless America’s economy begins to plummet again like it did in 2009 when gas prices were so much cheaper, we aren’t going to see much lower prices at the pump.

I love the way the LOGA post ended, and end on the same note: “Cheap gas, or a job and a roof over your head? That’s pretty much what it comes down to.”

What is your perspective on rising gas prices? Can Obama influence prices or should we settle in for higher gas prices?

Posted in Challenges Oil and Gas Industry Faces, Politics and Oil & Gas Industry | Leave a comment

EPA under fire after Regional Administrator’s comments cause public to question agency’s impartiality

Posted on May 1, 2012 by Mallory Schlabach

Senator Inhofe’s House address last week regarding an EPA Regional Administrator’s comments to “crucify” the oil and gas industry to make an example shook the industry over the weekend.

In a 2010 town hall meeting in Dish, Texas, Region VI Administrator Al Armendariz gave a crude analogy regarding “crucifixion” to explain of how the agency intends to handle the oil and gas industry. While the video documenting the speech was up on Friday, it since has been removed in many places online – but with a little digging you may be able to find it.

Here are parts of Armendariz’ quote:

“But as I said, oil and gas is an enforcement priority, it’s one of seven, so we are going to spend a fair amount of time looking at oil and gas production. And I gave, I was in a meeting once and I gave an analogy to my staff about my philosophy of enforcement, and I think it was probably a little crude and maybe not appropriate for the meeting but I’ll go ahead and tell you what I said. It was kind of like how the Romans used to conquer little villages in the Mediterranean. They’d go into a little Turkish town somewhere, they’d find the first five guys they saw and they would crucify them. And then you know that town was really easy to manage for the next few years. And so you make examples out of people who are in this case not compliant with the law.”

Armendariz went on to say, “Compliance can get very high, very, very quickly. That’s what these companies respond to is both their public image but also financial pressure. So you put some financial pressure on a company, you get other people in that industry to clean up very quickly. So, that’s our general philosophy.”

Senator Inhofe brought up this incident with Armendariz to question the impartiality and the EPAs handling of three significant cases for the oil and gas industry, which appear, from the industry’s perspectives to be witch hunts.

The three cases under question that the EPA has been excessively forceful without any evidence are in Dimock, Pa., Parker Country, Texas, and Pavilion, Wyoming.

In all three cases, highly publicized press releases, reports and statements were made to the public regarding what the EPA said is fact that hydraulic fracturing causes water contamination in those areas. Since those releases, the EPA has gone on to find no evidence supporting their publicized claims.

EPA Regional Administrator Armendariz has since apologized for his statements regarding “crucify them,” but I doubt the media lash back will be as easy as he hopes. On Monday, Armendariz resigned from his post over Oklahoma, Texas, Arkansas, Louisiana and New Mexico.

How has the EPA handled the oil and gas industry in your state? Is Armendariz’s principles something widespread among the entire EPA agency?

Posted in Challenges Oil and Gas Industry Faces, Hydraulic Fracturing, Oil & Gas Industry, Politics and Oil & Gas Industry | Leave a comment

Will clean energy appear on our horizon soon?

Posted on April 26, 2012 by Mallory Schlabach

Leading energy-decision makers from 23 countries convened yesterday in London for the third annual Clean Energy Ministerial to work together to advance clean energy technology on a global scale, including the U.S. Energy Department’s Secretary Steven Chu.

While I agree with most in the oil and gas industry that the clean energy initiatives will take longer than projected because of America’s dependency on oil – and strong domestic presence thanks to newfound energy in the Bakken and Marcellus shales, here is a look at the initiatives the group is focusing on and how soon they hope to see them in action.

The group which includes countries such as Australia, Brazil, Germany, Japan, South Africa, Spain and Norway, accounts for 90 percent of global green energy investment. While convening, the group focuses on what’s been accomplished during the past year and on creating plans for these 11 clean energy initiatives:

- Electric Vehicles Initiative intuitively focuses on electric vehicles on a global scale. Specifically, the initiative seeks to have 20 million electric vehicles, including plug-in hybrid vehicles on the road worldwide by 2020.

- Global Superior Energy Performance Partnership focuses on energy savings in the commercial buildings and industry. One such way countries are working on this is through joining the Cool Roofs Working Group. Last year India, Mexico and the United States committed to begin paving the way for a cooler planet by using white roofs on industrial buildings.

- Super-Efficient Equipment and Appliance Deployment Initiative works to transform the global market to create and sell energy-efficient equipment. Potential savings by switching to energy-efficient equipment and appliances is so great, that the Ministerial projects that by 2030 as much as $1 trillion of energy-related expenses could be saved by decreasing the amount of energy used.

- Bioenergy Working Group works on the deployment of bioenergy, which essentially means it is a renewable energy source made from biological materials such as wood, straw, manure, sugarcane, etc. The term is also favored as a synonym to biofuel here in the States.

- Carbon Capture, Use and Storage Action Group works on overcoming barriers to capturing, using and storing carbon, as its name implies.

- The Multilateral Solar and Wind Working Group works to lower the costs of providing solar and wind energy across the world.

- The Sustainable Development of Hydropower Initiative works to develop sustainable, cost-effective hydropower.

- The Clean Energy Education & Empowerment women’s initiative strives to close the gender gap in clean energy, and recognize all ideas and talents from all members of society are needed to bring technological breakthroughs of the future.

To be honest, my first reaction was, ‘Are you kidding me? This is necessary in 2012? It’s sad that initiatives such as this have to be created so that women and men can be seen as equals in technological and scientific fields. What surprised me even more was that in the United States, women hold only 27 percent of science and engineering jobs – and only 21 percent when jobs are limited to the business and industry. Props to those women worldwide who work to make all fields of study equal regardless of gender.

- The Clean Energy Solutions Center is an online forum to share clean energy policy best practices, data and analysis tools across countries.

- The International Smart Grid Action Network works to accelerate the development and deployment of smarter electricity grids worldwide.

- The Solar and LED Energy Access Program wants to transform the global market for affordable, clean and high-quality off grid lighting for the approximately 1.6 billion people who lack access to grid-supplied electricity worldwide. The program’s goal is to provide improved lighting services for 10 million people within five years.

How viable do you think these initiatives are? To follow updates from the Ministerial this week, check them out on Twitter at: #CEM3.

Posted in Energy Future, Going Green, Technology | Leave a comment

SherWare clients tout favorite oil and gas accounting software

Posted on September 29, 2011 by Mallory Schlabach

With so many Americans using QuickBooks for their personal and business accounting needs, I thought I’d ask our community of SherWare users to help us out again on a blog post to see what benefits they’ve found in using QuickBooks for business needs. Here are their top 10 benefits of using QuickBooks and top 10 things they like about QuickBooks.

While our oil and gas accounting software package that integrates with QuickBooks is definitely our most popular package, some of our users who have SherWare’s full Accounting Manager package of our software also chimed in with their top 10 reasons why they would go with a fully integrated system for their oil and gas needs.

As always, our users are so insightful. I hope you find some of their responses as helpful as I did in understand the pros and cons of both.

10 Benefits of Using QuickBooks (in no particular order)

1. You can use it for more than one facet of your life for bookkeeping purposes if you have multiple businesses, personal finances, etc.

2. QuickBooks is an industry standard. It’s very easy to use, yet very powerful.

3. The ability you have to drill down on anything from anywhere within the program and get to and edit the source.

4. The simplicity of the program makes it indispensible.

5. Using QuickBooks allows us to give our accountant the information he needs for tax purposes at the end of the year.

6. It’s easy to replace employees if need be, because the software is commonly known and used.

7. “After having used QuickBooks for almost 20 years, it truly is the most user-friendly software on the market. It’s great for professionals, but so self-explanatory that most non-accounting professionals are able to use it easily.”

8. It’s a well tested and very stable program.

9. The biggest benefit is how SherWare and QuickBooks integrate with each other so a person only has to enter their data once and get all the detail they need for the oil and gas side and finance side.

10. Using QuickBooks allows us to process bills not directly related to a well.

10 Things You Love About QuickBooks

1. The ease of use and ability to get help with it

2. The ability to send electronic files to your accountant

3. All the “canned” reports and the ability to modify them on the fly and save them

4. That the program is so portable and accessible – especially with the online version

5. The search and find abilities are superior to any other program

6. “QuickBooks is simple, yet accommodating and ‘intuitive,’ well that’s in their name, no?”

7. Memorized transactions

8. That the program works for multiple companies

9. How flexible the accounting software is to fit so many different types of businesses

10. The quick view of the check register on the home screen

Now for those considering either going with our QuickBooks-compatible software or a fully integrated package, here are what our clients with the Accounting Manager said about why they love the full package.

Five Things We Love About SherWare’s Accounting Manager

1. The Accounting Manager is specific to the industry, has all the proper verbiage, is easy to use and you can always get help from support if/when you need it.

2. Being able to see the well/owner information and look up expenses, write notes about the owners/vendors/wells and everything associated with everything to the well in one system.

3. That the program is fully integrated and gives you more options to create the accounting system at the level of detail and sophistication that is best for you and your company.

4. That everything is processed for you without having to complete additional steps.

5. The Accounting Manager has everything I need to do my job in one place – there’s no need for other software.

Whether you love your QuickBooks accounting software or are looking for something more integrated, there are obviously cheerleaders for both sides that can chime in with their advice. If you’re still deciding between the two, contact us for more information on the products, or download an information packet to help get a feel for which one might be a better fit for you.

Posted in Accounting Software, Oil & Gas Software, Oil & Gas Software that Integrates with QuickBooks, SherWare | 3 Comments

Clients offer insight into Intuit’s Future of Accounting Report

Posted on September 26, 2011 by Mallory Schlabach

After my post earlier in the month on Intuit’s 2020 Accounting Report, I sought the insight of our accountant and bookkeeper clients to see if what the report predicted, jived with how our clients saw their industry. Here is what they clarified for me:

Trend One: Outsourcing accounting functions such as data entry and bookkeeping

For me, outsourcing accounting functions to other countries such as India didn’t make sense. I thought perhaps since I don’t delve deeply into the accounting world that I just wasn’t seeing the big picture. But according to our clients, outsourcing doesn’t make much sense to them either.

Fifty percent of respondents thought there would be no benefit to outsourcing accounting functions. For the rest of the respondents, they felt the only benefit that they could see would be to lower labor costs, but that a greater need for quality review would be required, negating the cost benefit.

I suspect that the accounting firms that will likely go to outsourcing in the future are large accounting firms and not small to medium sized firms that are more prevalent in America.

Trend Two: Globalization of accounting firms

Globalization appears to be no closer to reality among our clients than outsourcing accounting functions to India was. None of our clients who responded believed that their businesses would be going global anytime in the near future, primarily because of how local their businesses operate currently. Most oil and gas accounting clients that responded operate locally, within a few counties or states, with a small percentage of clients that operate across the country in multiple states.

One client who runs an accounting consulting business currently, said as part of his business, he does help come up with business plans that expand globally – which shows me it could be possible, just not as likely as Intuit may believe.

Trend Three: Accountants take on more of a consulting role, handle easy tasks less

My panel of clients seemed to be split down the middle regarding this trend predicted by Intuit. For those that responded based on their own personal businesses and local area, they did not see this happening anytime soon. The majority of the clients that they work for believe in “old-school” type accounting where if you are an accountant, you do the tax returns and data-entry, if you are a receptionist, you answer the phone, etc.

For the clients who responded based on how they saw the accounting field changing, not necessarily just their office – they definitely saw this happening and saw it happening now in some cases.

“Data entry will eventually go away as we perfect Internet based methods to download information instead of re-entering,” says Holly, an accountant in Ohio. “Bookkeeping always needs an overseer to make sure it is set up correctly and working as intended. I see an analysis role in this area that should not go away. Good consulting is necessary, but the daily oversight by a human with accounting skills is also imperative to avoid meaningless data.”

Kimberly, a bookkeeper from Ohio had this insight into why she already saw this happening in her area. “Full blown accountants are ALREADY and have been just consultants for a while now,” she said. “All of my clients use their accountants four times a year to check my work and to do their taxes. Bookkeepers like myself are mini accountants. We are doing most of the work and we keep learning how to make ourselves more valuable by learning how to do more of the things that the accountant used to do. A well rounded bookkeeper who thinks like an accountant is a powerful person to have on your team.”

Along those same lines, Teri, an accountant in Texas, suggested that yes, why wouldn’t accountants who have gone through the rigors of getting a college, masters and even higher degree in accounting want to handle something more complex and interesting in the future than simple tax returns and data-entry?

Trend Four: Baby-boomers vs. Generation X

I posed this question to our clients and received responses that humored me greatly: How do your client expectations differ between say baby boomers and younger generation clients in their mid-20s to early 30s?

About half of the respondents don’t deal with younger generation clients currently, so they couldn’t give a response. For the rest – hang on to your teeth, my generation is in for a smack-down.

Generically speaking, respondents believe that the younger generation clients want more technological solutions to their accounting needs, are more open to change and want to be able to handle everything online. They also believed that their younger generation clients are more creative and interested in the details of their finances.

On the flip side, my respondents also thought that younger generation clients want to get rich now and not invest in the future; are interested in the details and may challenge the accountant more, but are less apt to see the big picture; and that they tend to hurry in everything they do.

While I don’t necessarily disagree with the respondents’ assessment of my generation, it still made me laugh to see how we’re often viewed by the older generations. It will be interesting to see how my generation’s “attitudes” affect business plans and models in the future.

Trend Five: Social media takes on more importance as word-of-mouth and traditional advertising fades away

The final trend I questioned our clients on was the importance of social media in their field and if it would take on more prominence in the future. Nearly all respondents didn’t see social media as a trend that would catch on quickly – and primarily because social media is not something that is important in the oil and gas or accounting industries.

With so much personal data and financials involved in both oil and gas and the accounting industry, the majority of clients didn’t see using this tool other than perhaps for some marketing as useful.

What are your thoughts? Do you agree with our clients?

Posted in Oil & Gas Industry, SherWare Client, Technology | Leave a comment

QuickBooks Tips & Resources – Part 2

Posted on September 22, 2011 by Mallory Schlabach

For those QuickBooks users out there who follow the blog, last week we took a look at some tips from the QuickBooks Specialists blog by Ruth Perryman, a QuickBooks guru if there ever was one. Today, I’d like to look at a few that I’ve enjoyed from QuickBooks and Your Business, by Shannon Tucker.

A guide to selecting the best edition of QuickBooks for your business:

A: At SherWare, we have many tools and questions we ask to help get your started with the best edition and software package to meet your oil and gas accounting needs. As evidenced by our sales, our QuickBooks integrated edition is one of our most popular, which makes Tucker’s post outlining the various editions of QuickBooks so helpful.

I can walk you through picking the best oil and gas accounting package we have, but I don’t have the level of expertise with QuickBooks to direct you to the best package to integrate with our program. Here’s an outlined version of Tucker’s original post.

Like our software packages, all QuickBooks editions will handle your basic accounting needs. What varies between editions is the special features and nuances that can make or break how smoothly your accounting operations flow.

For small businesses:

QuickBooks Online Plus

- Program entirely online

- Can handle up to 5 users at once plus the accountant

- Handles accounting records from multiple locations in real-time

QuickBooks Pro

- Can handle up to 3 users at the same time working on a network

- Best selection for small businesses to handle general accounting functions

- Can add optional modules to create your own package

For small to medium businesses:

QuickBooks Premier

- Can handle up to 5 users at the same time working on a network

- Can purchase industry-specific editions (although there isn’t one for the oil and gas industry)

- Allows you to do business planning and forecasting

For medium businesses:

QuickBooks Enterprise Solutions

- Can handle up to 30 users at one time working on a network

- Is designed to handle higher transaction volumes and database sizes

The costs for each of these products obviously vary depending on the number of users and increase the larger the product you need. Check Intuit’s website for current pricing information.

How do I limit the access my employees have in QuickBooks?

A: Since QuickBooks houses your most intimate details about your business’ financials, it makes sense that you don’t want everyone who works in your office to have the ability to access and edit any information in the program.

You can control which features each employee can access and whether they have the ability to edit information on that screen or only read it by going to Company > Set Up Users and Passwords > Set Up Users.

Once you’ve either selected an existing user or create a new one, you’ll be able to choose what parts of the software they can access by walking through QuickBooks’ wizard allowing you to go through each function step-by-step and selecting options.

By taking the time to set up each user properly with the amount of freedom within the QuickBooks program at the beginning, you’ll give yourself peace of mind and protect your business from fraud and error by knowing precisely who can access your financials.

The areas available for setting security controls include:

- Sales and Accounts Receivables

- Purchases and Accounts Payables

- Checking and Credit Cards

- Inventory

- Time Tracking

- Payroll and Employees

- Journal Entries and Online Banking

- Financial Reporting

- Changing or Deleting Transactions

Should you choose to overwrite when restoring a backup?

It happens to the best of us. A computer crashes, you get a new computer or need to correct data errors your QuickBooks file is currently experiencing. When you go to restore your QuickBooks data, many people choose to keep the restored file name the same, prompting the fear-inducing question: Do you want to overwrite the existing file?

Initially, your first reaction may be to simply re-name the file so you don’t have to worry about accidentally overwriting the wrong file. But upon further thinking, it’s possible that without a consistent name for your QuickBooks file, other users may accidentally begin using the old version of the software if stored on a network – creating a whole host of other problems that may not be easily fixed.

Shannon offers a ingenious solution that takes a few minutes more to ensure that you have the most accurate data in your QuickBooks company and to prevent users in the office using all different versions of the same file.

Before beginning to restore your backup of the QuickBooks company, he suggests creating a folder within the main folder where you store your QuickBooks data and naming it Old Copies. With all users out of QuickBooks, open My Computer and browse until you get to the folder or network drive where your QuickBooks data is stored. Click and drag your company data file to the Old Copies folder you’ve created (It’s a file with a .qbw extension at the end), and rename it with your company’s name and today’s date.

By moving it out of the original data folder and renaming it with today’s date, you no longer have to worry about users accidentally grabbing the wrong file since it’s labeled as a dated version. You also can now go into QuickBooks and restore a backup without having to worry about it asking if you want to overwrite the file. With the old data out of the folder, it won’t try to rewrite it – giving you a clean slate to start with and the most recent backup clearly dated if you need to go back in time.

What other tips do you have that help you get through your work? Are there any other QuickBooks Tip blogs you follow as well?

Posted in Accounting Software, Oil & Gas Software that Integrates with QuickBooks, QuickBooks | Leave a comment