Malone Petroleum Consulting



Some operators will refuse to grant credit for oil and gas audit exceptions

Some operators will refuse to grant credit for oil and gas audit exceptions

If you see that most exceptions are answered honestly by the operator in a positive manner, you probably have a very honest operator and can invest future funds with them. When you see most of the exceptions denied, we would highly suggest you run for the nearest exit and invest with a more ethical operator.

We are long-time, highly experienced experts in this business and do not write up exceptions unless we truly believe in them, either contractually or in compliance with good faith and industry practice and standards. Our recommendation is to encourage the operator to give credit and be in compliance with the contract. Some more intelligent operators are simply beautiful and great people; they will agreeably give credits in grey areas to the non-operators simply as a expeditious, good-will gesture in order to keep investors happy and to keep them investing. After they have agreed to all the exceptions, then they might take us out to lunch; wish us well and e-mail us later asking us free guru questions. If the Operator refuses to grant a valid exception, we had one strong Non-Operator to simply deduct the amounts from the monthly invoice.

An ingenious Non-Operator will sometimes simply use the exceptions as a negotiating strategy for a separate purpose which benefits all parties. Usually Non-Operators will not sue the operator since the legal costs normally would exceed the amount of money in dispute. However, there are times when the operator knowingly gives the investor no other choice.

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