FINANCIAL AND ACCOUNTING ADVISORY FOR THE ENERGY INDUSTRY
Overcome disruption and make meaningful operational improvements
The energy industry faces renewables disruption and declining demand at an unpredictable and accelerating rate. Accounting and financial advisors require a deep understanding of the industry and its unique challenges.
The experienced professionals at CFGI have worked in all facets of the energy complex. We have the expertise to complement your finance and accounting professionals with:
- Exploration and Development.
- Drilling and Oil Field Services.
- Midstream Processing and Transportation.
- Refining and Marketing.
- Energy Trading and Hedging.
How CFGI helps
Major new accounting pronouncements on revenue, leasing and hedging have largely been implemented, though year-end financial statement disclosures, documentation and internal controls may still need to be refreshed.
Today, CFOs are expected to deliver strategic value through more meaningful data and analysis. To meet the ever-evolving needs of the CFO, CFGI offers transformational services such as operating model optimization, enterprise performance management and similar offerings.
Fair value cash flow projections are highly dependent on engineering estimates of oil and gas reserves, as well as the forward price curve for commodities. Estimated development costs of proved undeveloped reserves need to be rationalized to support reserve recognition. Accounting should not overlook the documentation and support of fair value estimates and related management review controls.
Acquisition and Divestitures
Across the industry, it’s a common strategy to consolidate to reduce corporate overhead and improve operating leverage. Another common tactic is to divest poor performing properties to optimize capital efficiency. The finance department may require additional staffing and expertise to address new SEC financial reporting regulations, pro forma financial information and purchase accounting.
Work-from-home arrangements have strained the accounting close process and resulted in inefficiency and delays in disseminating critical financial and operating information to manage the business. A fresh look at the process and related controls may be warranted.
Liquidity and Debt Compliance
Current economic conditions have dramatically impacted cash flow, leverage and coverage ratios, putting added stress on the traditional sources of industry financing. New accounting pronouncements have also impacted financial debt covenant calculations and require the determination of going-concern and related liquidity disclosures. Meanwhile, a legal reorganization may require a totally different financial reporting model altogether. To address these financial reporting matters, it’s necessary to assess the organization’s accounting skill set.
Robotic process automation accelerates cost reduction strategies. Routine recurring processes with minimal accounting and business rules are ripe for automation. The energy industry has many relevant processes that fit this description, including:
- Oil and gas revenue accrual.
- Joint-interest billing and COPAS charges.
- Field operating expenses.
- Leasehold equipment.
Mergers are necessary to reduce current oversupply conditions. Having subject matter experts with energy industry expertise is critical to the successful assessment of deal risks. CFGI can assist due diligence teams, complementing the evaluation of oil and gas reserves, land records, royalty disputes, volumetric imbalances, processing, transportation and marketing contracts, and financial and commodity hedging programs.
We provide a cross-functional team of experienced professionals who approach every project through the lens of an accountant, auditor, technologist and consultant. Combined with Big Four expertise, our team is equipped with the knowledge and understanding to provide strategic guidance and cost-effective recommendations.
Contact us to learn more about how we can augment finance and accounting at your company.