Escheatment for upstream oil and gas producers can be somewhat complex because of the intricacies and nuances that impact an operator’s general ledger, reporting timelines, and ownership records. In part, escheatable funds can arise for an oil and gas producer via an acquisition from the suspense ledger or during the ordinary course of drilling, completing, and operating new wells in a capital drill program. Furthermore, escheatment guidelines aren’t always a one-size-fits-all solution; rather, each state has its unique requirements that need to be regularly monitored and met to ensure timely and proper reporting.
Here are three reasons why hiring Opportune Outsourcing adds value to upstream oil and gas producers in complying with escheatment in efficient and effective ways.
Escheatment is a complicated process, and as noted above, its rules are different across the U.S. Tracking these requirements can be arduous and time-consuming. However, Opportune Outsourcing has the tools and know-how to track each state’s requirements and load this information into its accounting and reporting system. By utilizing this research and techniques, Opportune Outsourcing can more quickly identify escheatable royalty funds, assist clients with state-required due diligence, and prepare final reports for clients.
It’s not improbable that hundreds (if not thousands) of owners would be escheated, and when those reports come in, operators want a system that makes it quick and efficient to remove these lines from their vouchers. Gone are the days of line-by-line analysis identifying which owners in which production months need to be escheated. By leveraging Opportune Outsourcing’s systems and reports, we’re able to generate timely reports that can escheat the proper owners in their proper amounts. Further, this allows us to remove funds from revenue suspense accounts and transmit them to accounts payable for easy payment.
This scenario fits many of Opportune Outsourcing’s escheatment clients. As an example, “Acme Oil & Gas” acquires over 1,500 producing wells from Big Oil Co. with thousands of royalty owners. As “Acme” transitions the information and data from “Big Oil” into Opportune Outsourcing’s BOLO system, “Big Oil” will then also provide the suspense ledger detail, and this detail will show how long an owner has been in suspense and for what amounts.
Ordinarily, many producers buying these developed assets would load the suspense and proceed. At Opportune Outsourcing, we recognize potential exposures that might hinder accounting processes and we routinely work with clients to assist with reporting.
Our escheatment team is comprised of seasoned land and division order analysts, and we know that suspense ledgers have history. We know that there’s a story to tell with the chain of title, and to that end, we assist by running title and working with the different state offices to connect the dots when reporting escheatable funds. For example, “Acme Oil & Gas” acquired its assets in October 2017, and the suspense ledger lists owners in suspense dating back to 2005 production dates. Opportune Outsourcing can then jump in and assist with reporting and let the states know about the dates of acquisition, thereby reducing potential fees and penalties.
Opportune Outsourcing currently provides back-office services for more than 150 public and private companies around the world. Our Outsourcing team offers expertise in transactional reporting, land administration and reporting, JIB, AP/AR, production allocation and reporting, software system administration, and more. For more information, CLICK HERE.