The Challenge

In 2022, our client, an independent water infrastructure company serving E&P (Exploration and Production) companies, faced a significant challenge. They had entered into a contribution agreement where their private equity sponsor contributed their interests, forming a new combined entity segmented into four operating subsidiaries based on location and services. These subsidiaries provided produced water gathering, water disposal, and crude oil gathering services in Texas and New Mexico. The client needed a comprehensive valuation of the business enterprise of the four subsidiaries, as well as tangible and intangible assets, for financial reporting purposes adhering to ASC 805 – Business Combinations.

Over time, our client required valuations for various transactions, including acquisitions under ASC 805 and the valuation of a newly formed joint venture under IRS Revenue Code Section 704(c) for tax purposes. Additionally, the issuance of management incentive units (MIUs) necessitated quarterly valuations for financial reporting purposes in line with ASC 718 – Stock Compensation.

The Solution

Opportune, with its specialization in the energy industry, provided reliable and defendable valuation services. Our deep understanding of market dynamics, regulatory requirements, and industry-standard valuation methodologies enabled us to comprehensively meet the client’s needs. Our expertise helped the client ensure compliance for financial reporting and tax purposes.

We delivered in-depth and defensible valuation analyses of the acquired tangible and intangible assets, the business enterprise and allocated equity, as required. Throughout our relationship, Opportune’s valuation, corporate finance, and complex financial reporting groups acted as extensions of the client’s team, tackling complex financial and tax reporting needs with agility, efficiency, and timeliness.