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Accounting for the Oil and Gas Industry

NV oil and gas accountingAs difficult as the current economy is, the outlook for this industry is optimistic. By 2030 global energy needs are projected to be 30 times what they were in 1950 primarily as a result of demand by emerging markets. China, Canada and the United States are expected to provide in excess of forty percent (40%) of the resources to support this expanded growth. Oil will continue to be the most significant resource for meeting global energy needs, with natural gas replacing coal as the second most significant energy resource. Renewables will be the fastest growing segment.

Challenges and Opportunities

In the outlook for energy we see significant opportunities for economic growth and unparalleled innovation in technology. Shale plays in the oil and gas industry provide opportunity for independents who are positioned and capitalized to take advantage. Foreign investment in independent producers is at possibly the highest level ever. Entering into alliances through JVs or other participatory arrangements will continue to provide opportunity for independents. Innovation such as hydraulic fracturing continues to set the US apart. It is estimated that the US has 250 years in natural gas reserves and an additional 100 years of supply in currently undeveloped reserves of shale gas. But there is risk.

Competition for proved reserves, politically expedient fiscal policy, capital formation, regulatory policy and reporting and price volatility remain key challenges for independent producers.

Financial reporting and compliance under International Financial Reporting Standards (IFRS) may be required in the future. Companies must consider the impact of elections made currently under US generally accepted accounting principles on reporting under IFRS in future years.

International and domestic tax planning and reporting continues to be an Achilles Heel for many small and medium sized companies.

The successful company will have a well thought out strategic policy to answer these challenges. Your professional advisors are critical to that success.

Our tax and accounting services for the oil and gas industry include:

Contact us to request a consultation, or call us at 775-332-4200 today. Let us know how we can help you.