Defending an Oilfield Service Company Under Audit

CHALLENGE A publicly traded oilfield service provider faced a $26 million sales and use tax audit liability. After more than 10 years of audits, the company had accrued over 25% in penalties and interest. Without a solution, its liquidity crisis would worsen. MERIT SOLUTION Merit Advisors’ experts in audit liability and settlement services helped the client avoid bankruptcy by: Securing immediate reductions with the auditor to reduce liabilitiesNegotiating a settlement with the state that facilitated a closure of the audits, increased reductions and established a more attractive repayment structureDeveloping a new use tax compliance process to prevent future errors RESULT... Read More

Recouping Cash Paid on Exempt Transactions

CHALLENGE Staff turnover left limited resources available in an E&P company’s tax department. However, the large independent operator needed to find immediate cash recovery opportunities to support continuing operations. MERIT SOLUTION Merit Advisors stepped in and reviewed three years of purchase transactions to identify overpaid taxes. After discovering the client was unknowingly paying sales tax on exempt transactions, Merit: Filed refund claims with vendors to begin recouping cash as quickly as possibleWorked with vendors and the client to ensure future payments were taxed appropriately RESULT Tax refund claims totaling $4 million were filed with vendors and state authorities. Recouped dollars... Read More

Addressing an Operator’s Overpayments Holistically

CHALLENGE A Colorado oil and gas operator's longtime sales tax compliance staff left the organization, taking a great deal of institutional knowledge with them. With no matrix left behind to calculate liabilities, the company found itself paying sales tax on about 90% of purchases—and turned to Merit Advisors for assistance. MERIT SOLUTION Merit reviewed more than 20,000 invoices from a two-year period and discovered the client was unnecessarily paying sales tax on most of its transactions. Taking a holistic approach, our team: Phased out unnecessary sales tax paymentsQuantified past overpaymentsWorked with the client to ensure long-term compliance RESULT A $4... Read More

Supporting an E&P Through a Major Asset Sale

CHALLENGE A large E&P company with substantial acreage in a major shale basin was selling off a large block of assets. The company engaged Merit Advisors to minimize property tax liability for the benefit of both parties involved in the transaction. In addition, the company needed to transition the property tax function to the buyer in order to allocate personnel and resources more efficiently. MERIT SOLUTION Merit worked in partnership with the client’s internal tax department to maximize the capabilities of both teams. Together, we: Negotiated directly with county appraisal districts (CADs) following a thorough review of appraisalsCompleted valuation work... Read More

Saving an Operator Tens of Millions Annually

CHALLENGE A publicly traded independent oil and gas producer had deployed artificial lift solutions in wells spanning multiple states. However, taxing jurisdictions were inflating appraisals on those wells by factoring in production increases achieved—without recognizing associated expenses. The company engaged Merit Advisors to identify cash tax savings opportunities. MERIT SOLUTION Merit began by conducting a thorough review of the client’s well appraisals. Applying a holistic approach that encompassed expenses, burdens and post-production capital expenditures, our team: Negotiated directly with taxing jurisdictions on our client’s behalfSecured favorable appraisal adjustments based on the client’s substantial artificial lift investments RESULT Merit helped reduce... Read More

Identifying Repeatable Cash Tax Savings Opportunities

CHALLENGE Amid a severe industry downturn, a public oilfield service provider scrambled to preserve margins and defend its share of an increasingly lean market. The company engaged Merit Advisors to uncover all possible ways to minimize tax liability—allowing it to sustain operations. MERIT SOLUTION Merit began by conducting a thorough review of the client’s property tax appraisals. Our team then: Negotiated directly with county appraisal districts (CADs) on our client’s behalfCompleted work before CADs issued appraisal notices, lowering the basis for negotiations and avoiding formal public hearings RESULT Merit successfully negotiated lower appraisal values, reducing the client’s tax liability by... Read More

Oil Prices are on the Rise, But Challenges Linger: Our Sales and Use Tax Team Has Your Solution

After the unprecedented drop in oil prices in early 2020, commodities are finally back on the rise. But just because the cost is returning to normal, doesn’t mean the industry won’t face the consequences for months to come.  At Merit Advisors we understand that for many in the oil and gas industry—including our clients—are making tough decisions trying to protect their workforce and the stability of their business in this tough economy. We know you are trying everything to protect your balance sheet from reducing overhead and expenses, to collecting accounts receivable, finding relief from lenders, and selling assets.  But... Read More

Conserving Cash at the State and Local Level: Why Merit Differs from the Big 4

Merit Advisors’ Managing Partner and Co-Founder, Will Presson, sits down with James West of Evercore ISI on the podcast Invest with James West, to talk all things taxes. Learn more about the intricacies of state and local taxes and how the services Merit Advisors offers can help find cash savings for E&P companies and others in the oil and gas industry. Click to listen! Read More

Advocating for the Oil & Gas Industry One Bill at a Time

The Louisiana Oil and Gas Association (LOGA) represents the oil and gas industry in the state of Louisiana across the areas of exploration, production, and oilfield services. WIth a primary goal to enhance the industry, LOGA assists members through a variety of services like advocating to change burdensome regulations, educating the public and government about the importance of the industry, and working to lessen tax increases. A major challenge that many operators and service companies in Louisiana face is the unfair tax system. For decades, people have worked to make the tax assessment for the industry more fair and much... Read More

Coping with Covid-19 and the Collapse in Oil Prices: 7 Ways to Reduce Your Tax Burdens

As the coronavirus pandemic continues to run rampant throughout the United States and around the globe, many industries—not just the health sector—are beginning to feel its devastating effects. This pandemic will be a game changer for one in particular—the energy industry. As people continue to stay home, businesses remain closed, and countries essentially shut down, oil prices have plummeted as the demand for crude oil is halted. Despite the unprecedented cuts to global oil production, not enough has been done to salvage commodity prices. Here in the US, WTI crude is hovering in the low $20s per barrel, and could... Read More