COPAS Announces 6.3% Overhead Adjustment Factor Effective April 1, 2025

What Is the Overhead Adjustment Factor?

The overhead adjustment factor is a percentage used to adjust fixed overhead rates in COPAS model form accounting procedures attached to joint operating agreements (JOAs) for drilling and producing wells.  Overhead rates allow an operator to recover administrative and indirect costs because the rates are charged in lieu of actual costs.  The adjustment factor changes those rates annually to adjust based on inflation and changes in labor costs.

How the 2025 Overhead Adjustment Rate Was Determined?

COPAS calculated the annual overhead adjustment by averaging the change in two Bureau of Labor Statistics indexes: the Oil and Gas Extraction Index and the Professional and Technical Services Index.  This method has been in place since 2004, following the discontinuation of the Crude Petroleum and Natural Gas Workers Indexes and is explained in detail in COPAS Model Form Interpretation 50 (Overhead Adjustment Index Change). 

Other 2025 Economic Factors

In addition to the overhead adjustment factor, COPAS approved other economic factors for 2025:

• Audit Per Diem Rate: $1,225.00.  The Audit Per Diem rate is published to provide a rate companies can use when participating in the same audit.  They are not intended to govern rates for third-party or contract auditors.
• Loading/Unloading Costs: $1.12 per hundred weight
• Vehicle Rates: Varying rates per mile based on vehicle type, used to charge usage of operator-owned vehicles used in joint operations.

For more information on the COPAS annual economic factors and to access the overhead rate calculator, please visit our Martindale Resources page.