Parsley Energy Inc. (Parsley), is an exploration and production company withoperations in the Permian Basin and is based in Midland, Texas. Opportune wasengaged to assist Parsley through its initial public offering (IPO) process, includingfiling a registration statement on Form S-1 (S-1) with the Securities ExchangeCommission (SEC).
Opportune’s transaction services and tax experts worked with the complex financialreporting team to coordinate the complex process of filing the S-1. The legal and taxnature of Parsley’s IPO vehicle would be a tax-paying C Corporation, however, not100% of Parsley’s predecessor ownership interests would be contributed to theregistrant in the IPO, as Parsley’s owners elected to employ the contemporary UP-Cstructure to enhance their yield on their investment.
Parsley needed to record the future tax liability of the members related to the portion oftheir interests contributed in the IPO, as those future taxes would be due by the new CCorporation. Under tax law and accounting rules, the pre-IPO tax liabilities of Parsley’sshareholders as a private company must now be recorded as liabilities of the registrant.Opportune calculated the amount and made the appropriate adjustments anddisclosures in the S-1. In the end, a liability of $100 million was recorded on the initialS-1 for Parsley. Opportune’s team then communicated the tax complexities and theirrelated financial reporting treatment to the various stakeholders for theirunderstanding.
Opportune provides comprehensive tax solutions for businesses that require strategicor tactical tax support. Our seasoned professionals combine sound, innovative andadaptable ideas with the pragmatism that comes from having been on both sides of thedesk — in both corporate and consulting roles. We develop creative solutions that driveperformance while mitigating enterprise risk. For additional information, click here.