Upstream: Complex Financial Reporting: Technical Financial Reporting & Valuation Services
In Q1 2019, a privately held oil and gas company (the “Company”) engaged in the acquisition, development and operation of oil and natural gas properties in the Rocky Mountain region filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code. After executing a plan of reorganization during Q4 2019, the Company emerged from bankruptcy protection and was faced with the task of fulfilling the resulting financial reporting requirements.
In December 2019, the Company engaged Opportune to leverage the firm’s cross-functional team of experienced professionals to quickly gain a comprehensive understanding of the reorganization plan and successfully deliver on the following services:
- Assess whether the Company qualified for the application of fresh start reporting under the provisions of Accounting Standards Codification (“ASC”) 852, Reorganizations (“ASC 852”).
- Determine the required reorganization adjustments to record the impact of transactions prescribed by the plan of reorganization and the fresh-start adjustments needed to reflect the fair values of the Company’s assets and liabilities upon emergence from bankruptcy.
- Complete a valuation of the Company and its oil and gas properties.
- Collaborate with the Company and its tax advisors to identify and assess potential tax impacts of the reorganization.
- Determine the proper financial reporting for certain embedded features, included in the Company’s purchase agreements and perform a valuation of such features.
- Complete valuations of the Company’s commodity derivatives for multiple periods.
- Prepare the Company’s financial statements and related footnote disclosures in accordance with U.S. GAAP. This included the proper presentation of financial statements of the “Successor” reorganized Company for the post-emergence period and the “Predecessor” Company for periods prior to emergence.
Opportune added value to the Company by identifying potential financial reporting and valuation complexities early in the process and involved the appropriate subject matter experts to resolve issues in a timely manner. Opportune’s professionals delivered a suite of services to effectively and efficiently execute all required work streams to lessen management’s burden of complying with the complicated financial reporting requirements associated with the Company’s reorganization. Aided by Opportune’s efforts, the Company successfully completed and released the required financial statements.