Opportune Experts Descend in Denver for 2019 AICPA Oil & Gas Conference
What are the latest tax and regulatory trends affecting the oil and gas industry? Why is reserve-based lending (RBL) so turbulent in today’s energy market? Why is cash flow forecasting important? Answers to these questions and more were discussed when Opportune LLP experts descended in Denver, Colorado for the 2019 AICPA Oil & Gas Conference on November 10-12, 2019.
Partner Josh Sherman and Director Matt Smith kicked off the event in the pre-conference workshop on November 10 discussing some of today’s toughest accounting issues oil and gas companies face as a result of regulatory and market fluctuations. Relevant regulatory changes discussed included:
- The FASB’s update to the definition of a business and applicable screen test;
- SEC proposed changes to the presentation of significant acquisitions; and
- Current Expected Credit Losses (CECL)
Sherman and Smith also discussed market-driven complexities such as upstream “DrillCo” arrangements with private equity and midstream partners, as well as modifications to share-based payment arrangements and mezzanine financing structures with characteristics of debt and equity. Many issues around ASC 842 (lease accounting) implementations were discussed, but this session went into details of identifying embedded leases, calculating the Incremental Borrowing Rate (or IBR) and implementing practical expedients.
Meanwhile, Director Allison Firestone presented on November 12 specific techniques and modeling applications that should be used by both banks and producers that help model future cash flows and covenant compliance. In addition, she addressed how to incorporate reserve and valuation analytics to identify or avoid liquidity and borrowing base issues before they become critical.