This is a reporting requirements and severance tax case involving a multinational energy company in Pennsylvania. Allegedly, the company had manipulated their royalty payments by overcharging on post-production expenses, reducing the amount of royalties they needed to pay. The company was also accused of failing to use the reasonable market value for their gas, affecting their royalty payments even further. Facing uncertainty over the company’s taxes and profits, an accountant experienced in oil and gas accounting was called in to look into severance tax records to comment on the case.
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-007464
I have decades of experience in oil and gas accounting and severance tax issues. Throughout my career, I’ve developed an expertise in oil and gas accounting practices, specifically related to severance tax and royalty calculation. I also have experience testifying in court as an oil and gas accounting expert.
Expert Witness Response E-025620
I do consider myself an expert in oil and gas accounting. I was heavily involved in the inspection of oil and gas companies while I was an auditor at multinational professional services network. This position required a thorough understanding of the proper accounting for oil and gas activities. Subsequent to my audit work, I have involved in numerous litigation matters that required expertise in oil and gas accounting. I just completed an engagement where we assessed potential royalty underpayments, involving post-production costs but not severances. Of course, the underlying leases are fundamental to determining what costs may be deducted from royalty calculations. I also experience calculating royalties after the deduction of severance taxes.