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Upstream: Corporate Finance: Final Settlement Statement and Transition Services Statement Review

A Houston-based, private-equity backed exploration and production company (the Company) is focused on the acquisition and development of producing oil and gas assets in North America.  The Company purchased offshore properties located in the Gulf of Mexico from an undisclosed seller (the Seller) effective July 1, 2013 for $3.8 billion.

The Company engaged Opportune to review the final settlement and transition services statements (FSS and TSS, respectively) proposed by the Seller in connection with its acquisition of producing properties. Opportune’s experts evaluated each proposed adjustment to the FSS and TSS to determine applicability and relevance under the terms of the respective agreement.

The review included tests of over $120 million worth of expenditure transactions related to upward purchase price adjustments proposed by Seller and tests of over $11 million in cost allocations related to upward purchase price adjustments proposed by Seller.  Opportune also performed trend analyses of reported revenue receipts, testing of selected balance sheet balances, and testing of hydrocarbon inventories valuation.

Opportune identified over $33 million worth of exceptions relating to pre-effective date charges and working interest cutback discrepancies, and an additional $11 million in extrapolated errors.  Also, our professionals identified over $22 million worth of adjustments relating to gas imbalance positions and identified allocation errors amounting to nearly $3 million.  In total, Opportune’s findings represented over $60 million in real cash savings to the Company. For more information, click here.

Carl Wimberley

PartnerOpportune LLP