Opportune Publishes a Cost-Benefit Analysis of Additional Offshore Bonding for Gulf of Mexico
HOUSTON–(BUSINESS WIRE)–#BOEM–Opportune, a leading global business advisory firm, announced today the release of a cost-benefit analysis assessing how future potential additional bonding requirements may affect both the U.S. taxpayer and independent oil and gas lessees in the Gulf of Mexico’s outer continental shelf (OCS).
Under previous Presidential Administrations, the Bureau of Ocean Energy Management (BOEM) has issued various Notices to Lessees (NTLs) that would change the evaluation criteria for OCS financial assurance requirements and the provisions under which additional bonds and third-party guarantees may be issued or cancelled. BOEM did not finalize the previous NTLs and now indicates that it may revisit the implementation of additional surety bonding requirements (Additional Bonding Requirements) in the near term. Opportune shows within its revised study (the Opportune 2023 Study) how the perceived benefits of Additional Bonding Requirements are wholly disproportionate to any potential risk. This study reiterates how the current rule has adequately protected U.S. taxpayers for decades.
“Federal regulations have always required previous owners to remain responsible for the decommissioning costs of wells, pipelines, and other facilities. The current system works, and the underlying risks are miniscule,” said Josh Sherman, Partner of Opportune’s Complex Financial Reporting practice. “Rather than imposing additional bonding requirements, BOEM has an opportunity to improve existing processes through better valuation techniques, using lessees’ audited financial data, and modernizing financial assurance vehicles that can further protect the U.S. taxpayer.”
This study was performed independently by Opportune’s valuation, petroleum engineering1 and financial reporting2 professionals through a series of interviews with Industry representatives, commercial banks, and surety brokers, and includes an analysis of independently obtained P&A cost data and market research. Full Report Here
Opportune LLP is a leading global business advisory firm focused on adding value to clients across multiple industries with preeminence in energy. Opportune’s practice areas include business transformation, complex financial reporting, disputes and litigations, investment banking, outsourcing, process and technology, reserve engineering and geosciences, restructuring, tax, transactional due diligence, and valuation. For more information, please visit our website at www.opportune.com.
1 Ralph E. Davis Associates is a wholly-owned subsidiary of Opportune LLP
2 Opportune LLP is not a CPA firm
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