Lower energy prices are forcing Permian Basin oil and gas companies to identify areas of cost savings and efficiencies. While companies may have previously lacked the time to evaluate accounting concerns, the current energy environment provides reason to address such concerns now.
Sales tax audits. Texas offers generous sales tax exemptions and refunds for oil and gas companies within the industry’s upstream, midstream and downstream sectors. A company audit can identify instances where sales tax might have been incorrectly assessed, revealing potential refund opportunities.
Joint-interest billing audits. The capital-intensive nature of the oil and gas industry requires companies to take on partners and investors in various joint ventures. Auditing joint-interest billing (JIB) transactions can identify any possible overcharges or other questionable practices, providing all parties with information needed to correct errors and assess the business relationship.
Other options. Beyond sales tax audits and JIB audits, companies can consider a few additional options:
- Land brokerage audit
- Escheatment analysis
- Lease operating expense (LOE) analysis
- Capital expense/AFE monitoring and process evaluation