Malone Petroleum Consulting



Oil and Gas Subsidiary Fraud Is Basically a License to Steal


Oil and gas operators that employ and/or own subsidiaries knowingly and blatantly have an irresistible conflict of interest and a mouth-watering license to steal from the many Non-Operators. On this odious debacle, there is not even a discussion. The subsidiaries can easily charge prices that exceed their actual cost. The subsidiaries can under deliver quantities of materials and services charged. The subsidiaries can charge for materials and services not delivered - this becomes very suspect when you see chemicals, for instance, being charged to your plugged well. When a vendor is not busy, their trucks sit in the yard - but when an operator's subsidiary is not busy, the trucks can be very busy - mostly on the wells where the operator has the lowest working interest. We can perform audits on operator's subsidiaries; however, we should warn you in advance that the cooperation from the operator and the subsidiary will be at a bare minimum - even if they will allow you access. You have to ask yourself, "Why would an operator charge himself for work that was not done, but was done on one of his own wells?"

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