Oil and Natural Gas Accounting and Tax 2018

Transcription

1 Oil and Natural Gas Accounting and Tax 2018 Presented by: Don Nestor, CPA Bill Phillips, CPA Ryan Nestor, CPA, CGMA Charlene Tenney J. Marlin Witt, CPA, CFP, CGMA Scott Stone, Chief Information Officer Benjamin Ellis, Director of IT Devon Jefferson, CPA November 15, 2018 Cranberry Twp., PA Arnett Carbis Toothman llp 2018

2 CONTACT INFORMATION Donald B Nestor, CPA don.nestor@actcpas.com Bill Phillips, CPA bill.phillips@actcpas.com Ryan Nestor, CPA, CGMA ryan.nestor@actcpas.com J. Marlin Witt, CPA, CFP, CGMA marlin.witt@actcpas.com Charlene Tenney, Supervisor charlene.tenney@actcpas.com Benjamin Ellis, Director of IT benjamin.ellis@actcpas.com Scott Stone, Chief Information Officer scott.stone@actcpas.com Devon Jefferson, CPA devon.jefferson@actcpas.com Buckhannon WV Bridgeport WV Charleston WV Meadville PA Morgantown WV New Castle PA Pittsburgh PA Visit us on the web at actcpas.com! 2

3 Presenters at the Oil and Natural Gas Accounting and Tax Seminar 2018 J. Marlin Witt, CPA, CFP, CGMA Donald B. Nestor, CPA William H. Phillips, CPA Scott Stone Chief Information Officer Devon Jefferson, CPA Charlene Tenney, Business Outsourcing Services Supervisor Benjamin L. Ellis, Director of Information Technology Ryan Nestor, CPA, CGMA 3

4 Donald B. Nestor, CPA Donald B. Nestor is a Certified Public Accountant and a Member of the CPA firm of Arnett Carbis Toothman, LLP.. Don graduated from Pickens High School in 1967, and West Virginia University in 1971 with a Bachelor of Science Degree in Business Administration and a Major in Accounting. While at West Virginia University Don was inducted into Beta Alpha Psi, National Accounting Fraternity. He is a member of his firm s Oil and Gas Industry Services Group and works in its Buckhannon, WV office. Don is a member of the Independent Oil and Gas Association of West Virginia (IOGA of WV) and has served six 3- year terms on its Board of Directors. He is Chairman of its Tax Committee. In 1994 Don was awarded the IOGA of WV Distinguished Service Award. He also is a member of the Pennsylvania Independent Oil and Gas Association (PIOGA) and the Independent Petroleum Association of America (IPAA) and presently serves as Chairman of their Tax Committees. He is also a member of the West Virginia Oil and Natural Gas Association (WVONGA) and serves on its Tax Committee. Don is a member of the Southeastern Ohio Oil and Gas Association (SOOGA). He was a member of the Board of Directors of Petroleum Development Corporation, a publicly traded oil and natural gas company with operations in Pennsylvania, West Virginia, Michigan, and the Rocky Mountains, and served as Chairman of its Audit Committee. Don was also named the 2009 Oil and Gas Man of the Year by the West Virginia Oil & Gas Festival. Don has previously served as President of several organizations including the West Virginia Society of CPA s, the West Virginia Board of Accountancy, the Buckhannon-Upshur Chamber of Commerce, the Upshur County Development Authority, Stockert Youth Center, the Buckhannon Rotary Club, the North Central WV Estate Planning Council and St. Joseph s Hospital Board of Directors. He is currently President of the Foundation for Better Schools in Upshur County, Chairman of the Professional Ethics Committee of the West Virginia Society of CPA s, and is a board member of the The Stockert Youth Center, St. Joseph s Hospital Foundation and St. Joseph s itself. In addition, in 2006, in response to the Sago WV mine disaster in which only 1 of 13 trapped miners survived, West Virginia Governor Joe Manchin asked Don to organize a 6 member committee to administer donated funds to help meet the needs of the families of the 13 miners. Don was also a member of the Army Reserves and West Virginia Army National Guard for 6 years and attained the rank of SP5. Don is very active in his local church, previously serving on the Executive Board of the West Virginia Baptist Convention and as Deacon of the First Baptist Church of Buckhannon, currently serving as teacher of an adult Sunday School Class and as Moderator of his Church and of the Broad Run Baptist Association. Don has presented numerous seminars concerning taxation and accounting for the oil and natural gas industry. He and his wife Judy reside in Buckhannon WV, and they have two children, Mendy and grandson Hudson of Pittsburgh, and Ryan and his wife, Destiny and granddaughters Derika and Ava, of Morgantown, WV. 4

5 William H. Phillips, CPA, Partner, Tax Department Bill is a 1981 graduate of West Virginia University with a Bachelor of Science Degree in Business Administration with a major in accounting. He received his CPA designation in Bill's areas of expertise include income tax, estate tax preparation and planning, natural resources, tax planning, and business planning. Bill is a member of the American Institute of Certified Accountants where he is a member of the Tax Division, a member and former board member of the WV Society of CPAs, where he has served on the Federal and State Tax Committees as well as on the Natural Resources Project Group, and is a past member of the Accountants Speakers Bureau. Bill is also a member of the Pennsylvania Independent Oil & Gas Association, the Independent Oil & Gas Association of West Virginia where he serves as a member of the tax committee, and is a member of NARO, the National Association of Royalty Owners. Bill served on the national tax committee of PKF North American Network an international consortium of CPA firms. Locally, he is a past president and current board member of the Central Chapter of the WV Society of CPAs, and he serves on various boards for charitable causes. Ryan Nestor, CPA, CGMA Ryan Nestor is a Certified Public Accountant and began his accounting career with Toothman Rice in He is a manager in the Morgantown WV office of Arnett Carbis Toothman. Ryan works on a broad range of engagements including, but not limited to compilations, reviews, audits, federal and state tax returns of all types, and SOX compliance projects. The majority of these projects are associated with clients involved in the oil and gas industry. Nestor continues to improve his expertise in the oil and gas industry by attending and presenting several continuing professional education classes each year. A life-long West Virginian, Nestor received Bachelor of Science in Accounting and a Minor in Communications Studies from West Virginia University. Ryan is currently a member of IOGA of West Virginia, PIOGA, SOOGA, COPAS, the Association of Desk and Derrick Club of West Virginia, North Central West Virginia Estate Planning Council, West Virginia Society of Certified Public Accountants, and the American Institute of Certified Public Accountants. Ryan and his wife, Destiny, reside in Morgantown, West Virginia with their daughters Derika and Ava. 5

6 Devon Jefferson, CPA Devon is a Manager, Accounting and Auditing, in the Charleston office of Arnett Carbis Toothman llp. She holds a Bachelor of Science in Accounting from North Carolina A&T State University, and a Masters of Science in Accounting from Michigan State University. She has over six years of public accounting experience and is a member of the American Institute of Certified Public Accountants (AICPA) and the National Association of Black Accountants (NABA). J. Marlin Witt, CPA, CFP, CGMA Marlin is a Tax Partner in the Oil and Gas Niche of Arnett Carbis Toothman llp, the largest independent CPA firm in West Virginia. Marlin s experience includes managing the Estate and Trust practice area of the tax department; preparation and review of income tax returns for Nonprofit organizations, Corporations, Partnerships, Estates, Trusts, and Individuals; performing tax planning and projections for Corporations, Partnerships, and Individuals; experience with multi-state taxes; and research into various tax matters. In addition to 15 years of experience in public accounting, Marlin served as a trust officer for five years and as CFO for three years for a multimillion dollar charitable organization with multiple operations. He is a member of the American Institute of Certified Public Accountants, West Virginia Society of Certified Public Accountants, and Charleston Chapter of West Virginia Society of CPAs. Marlin received a Bachelor of Science in Business Administration with a Concentration in Accounting from West Virginia State University. 6

7 Charlene Tenney, Business Outsourcing Services Supervisor Charlene has been with Arnett Carbis Toothman since 1998, primarily in the oil and gas department. She has worked with acquisitions and sales, distribution of revenue, joint interest billing and production taxes and has participated in revenue, AFE, and JIB testing for various clients. She worked in the oil and gas industry prior to her time at ACT doing distributions, division order maintenance and corporate accounting. She also performed as an employment counselor for a series of Department of Labor training programs for unemployed persons; and co-owned a retail stationary store. She is the Charter President of the West Virginia Desk and Derrick Club and the 2013 Director from Region I for the Association of Desk and Derrick Clubs, a former Secretary and Treasurer for the Buckhannon-Upshur County Chamber of Commerce, receiving its 1997 Athena Award. She was Co-Chair of the Buckhannon Convention and Visitor s Bureau and a member of that organization for sixteen years. She and husband, Joe, live near Buckhannon. Benjamin L. Ellis, Director of Information Technology Benjamin L. Ellis is a seasoned leader with over 18 years of information systems experience. He is a recognized leader adept at creating a strategic vision to achieve business goals. In this capacity Benjamin oversees all technology operations and information systems for Arnett Carbis Toothman LLP. He delivers greater returns on the firm s technology investments and improved business outcomes by leveraging technology creatively and efficiently. Benjamin is a frequent public speaker who is capable of taking complex issues and making them easy to understand and a visionary that sees opportunities where others see obstacles. While he is not afraid of risk, Benjamin carefully weighs all options to ensure the best possible outcomes. Through his unique perspective he is able to quickly get to the heart of difficult issues while creating consensus using principles of teamwork. Benjamin has a Bachelor of Science Degree in Business Administration with a concentration in Information Systems from West Virginia State University, Institute. He also has a Master s of Business Administration with a concentration in Technology Management from the University of Phoenix. Benjamin s areas of specialization include business planning, virtualization, administration, and IT security. His prior technological experience includes legal, education and not-for-profit sectors. Benjamin serves his local community primarily through his local church where he has served in numerous capacities by serving and leading boards including leading as the chairman, media, technology, teaching, and more. Through the local church, he has been able to help many less fortunate families, adults, and children including flood victims, the hungry, people struggling with addiction and those in need of financial counsel. 7

8 Scott Stone, Partner, Chief Information Officer A two-time graduate of Edinboro University with a Bachelor s degree in Specialized Studies from the Physics Department and a Master degree in Communications, Scott is a Sophos Certified Engineer, a trained Certified Ethical Hacker, and was recently awarded a certificate in Cyber Threat Analysis from the National Cyber-forensics & Training Alliance. Scott is the Chief Information Officer for Arnett Carbis Toothman LLP. With over twenty five years of experience in the Information Technology profession he is responsible for evaluating new technology initiatives, as well as oversight of the IT Department and Computer Consulting Services group. He is the Chairperson of the New Castle Area IT Professionals group and has served on State Senator Mary Jo White s Communications and Technology Advisory Committee. Scott assists clients with a variety of computer consulting services such as cyber-security reviews, IT audits, networking configuration, system evaluations, virtual CIO services, penetration testing, and hiring of IT staff. Scott s broad understanding of IT solutions is often employed to help clients find the right solution to their IT problems in an effective and efficient manner. Scott routinely speaks to local business groups on a variety of topics from IT industry trends to protecting companies with cutting edge security appliances. He is an active volunteer at the New Castle (PA) YMCA, is the Scoutmaster of Troop 743 in Neshannock, PA and is the Vice President of the Arts and Education board at the Hoyt Institute of Fine Arts. 8

9 OIL & NATURAL GAS ACCOUNTING & TAX 2018 Table of Contents Presentations 1. Oil & Natural Gas Past, Present & Future 2. Revenue Distribution and SALT 3. Oil & Gas Tax Issues 4. Financial Reporting 5. Due Diligence 6. Tax Reform 7. IT Security 9

10 Oil & Natural Gas Past, Present & Future Donald B. Nestor, CPA 10

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12 PA Geology 12

13 Sample Ohio Geological Cross Section 13

14 Marcellus Shale Coalition 14

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17 Appalachian Basin Historic Gas Prices $4.500 APPALACHIAN BASIN HISTORIC GAS PRICES $/MMBtu $4.000 $3.500 $3.000 $2.500 $2.000 $1.500 $1.000 Nymex TCO Indx DOM Indx $0.500 $- Sources: CME Group Platts Gas Market Report 17

18 Henry Hub

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25 The new ethane cracker in Beaver County will look a lot like this Shell petrochemical complex in China. Construction of the massive polyethylene complex in Beaver County, just outside of Pittsburgh, will create up to 6,000 construction jobs and 600 permanent jobs upon completion in the next decade, the company said. 25

26 Artist s Rendition of Cracker Plant 26

27 Oil & Natural Gas Past, Present & Future Unique, Solid, Reliable Supply Confirmed & Demand Developing Shift to Mid-Stream/Pipelines Accurate Complex Mineral Interest Reporting Different Players Producers, Service Companies, etc. Federal & State Tax Regulation Impact Succession 27

28 Thank You