This case involves the alleged underpayment of royalties to a group of plaintiffs involved in the extraction, refinement, and sale of a variety of oil and gas products in the Alaska. The plaintiffs were the owners of a tract of land upon which the defendant company had operated fossil fuel extraction operations. It was alleged that the defendant over charged for post-production expenses such as transportation and compression, which in turn reduced royalty payments due to the plaintiffs. In addition, the defendant allegedly did not obtain the reasonable market value for gas sold, once again underpaying royalties.
Question(s) For Expert Witness
- 1. Please briefly describe your experience as it relates to oil and gas accounting practices?
- 2. Do you have specific experience with severance tax, and calculating an appropriate royalty amount after deductions are taken out?
Expert Witness Response E-025620
I do consider myself an expert in oil and gas accounting. I was heavily involved in the auditing of oil and gas companies while I was an auditor at Price Waterhouse and then PricewaterhouseCoopers. Of course, that required a thorough understanding of the proper accounting for oil and gas activities. Subsequent to my audit work, I have been involved in numerous litigation matters that required expertise in oil and gas accounting. I just completed an engagement where we assessed potential royalty underpayments. These involved post-production costs but not severances. Of course, the underlying leases are fundamental to determining what costs may be deducted from royalty calculations. I have calculated royalties after the deduction of severance taxes.