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Upstream: Complex Financial Reporting: Undisclosed: Full Cost To Successful Efforts Conversion

Situation

A Houston-based oil and gas exploration company (“the Company”) engaged Opportune in 2017 to assist with the conversion from full cost to the successful efforts method of accounting for oil and gas properties for fiscal years ended December 31, 2011 through 2017. The successful efforts method of accounting is preferred by the U.S. Securities and Exchange Commission (“SEC”) and is favored by the investment community.

Approach

Specifically, Opportune provided project management and operational services by performing the following tasks in the conversion:

  • Gaining an understanding of the historical activity, including acquisitions and divestitures;
  • Preparing historical property roll forwards by field, by quarter or year, as appropriate;
  • Adjusting relevant account balances, including geological and geophysical exploration expense, delay rentals, dry hole costs and expired leasehold costs;
  • Providing the successful efforts net book value for calculating gains or losses on sales;
  • Determining annual leasehold transfer from unproved to proved property by field;
  • Determining annual impairment/allowance for expired leasehold costs;
  • Delivering of summary successful efforts for oil and gas property rollforwards; and
  • Coordinating with the Company’s auditors throughout the process.
How Opportune Added Value

Opportune added tremendous value by leveraging subject matter experts to provide project leadership and utilized consultants with strong technology backgrounds to organize and manipulate complex data sets into user-friendly work products. Through constant communication with the Company on a multiple-iteration project lasting several months, Opportune was able to provide the property roll forwards and project oversight in a timely manner and proactively anticipated issues so that the Company was able to file its 2017 10-K under successful efforts.

Complex Financial Reporting serves energy and non-energy clients through technical advisory, financial due diligence and SEC reporting. Our industry experience and technical expertise position us to provide leadership and guidance in emerging issues for both private and public companies in the energy industry, as well as integrate services with other areas of practice within our firm. For more information on our Complex Financial Reporting services, CLICK HERE.

Amy Stutzman

Managing DirectorOpportune LLP