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Reconciliation

As a part of USEITI, companies report payments to the government (e.g., rents, taxes, royalties) and the government reports what it received. These figures are compiled and reconciled by an Independent Administrator (IA) and published. The 2015 USEITI Report reconciled calendar year 2013 data. The 2016 USEITI Report reconciled calendar year 2015 data.

Download calendar year data:

Background

To implement the EITI Standard, government, industry, and civil society collaborate in a disclosure process called reconciliation. The three sectors in a participating country develop a framework for reconciliation. Government and industry share the total amount of revenue the government received and industry paid in the year under review with the IA. The IA reconciles reported revenue and investigates any discrepancies. The public can see the results for their country in an annual EITI report.

Through a unilateral disclosure, the Department of the Interior (DOI) has published online all in-scope revenue from extraction on federal lands by revenue stream and company for CY 2013 and CY 2015:

  • For the 2015 report, DOI reported a total of $12.64 billion in revenue, disclosing to the public 100% of in-scope DOI revenue from extraction on federal lands during CY 2013.
  • For the 2016 report, DOI reported a total of $7.80 billion in revenue, disclosing to the public 100% of in-scope DOI revenue from extraction on federal lands during CY 2015.

In addition to DOI’s unilateral disclosure, the Multi-Stakeholder Group (MSG) asked companies to report to the IA that same nontax information, revenue payments to DOI, as well as federal corporate income tax payments and refunds from the Internal Revenue Service (IRS).

Reconciliation Results

After the independent administrator compared company payments to government revenue, they worked with companies and government entities to investigate discrepancies exceeding the margin of variance, and were able to find explanations for all of them.

Several companies also allowed for corporate income tax reconciliation. Of the companies invited to participate, only C-corporations are eligible to report taxes.

Chart the scope of reconciliation reporting participation

Chart the scope of reconciliation reporting participation

Chart the scope of reconciliation reporting participation

Scope

Requirement 4 of the EITI Standard outlines the responsibility of the MSG to determine the scope of EITI reporting in the United States. In carrying out this responsibility, the MSG considered information from a variety of sources before coming to a consensus on the scope for each USEITI Report.

The MSG publishes meeting minutes and materials for all subcommittee and full MSG meetings on the MSG website. These minutes and materials document the MSG’s historical considerations and decisions around scoping. Please refer to Appendix A: Revenue Reporting Considerations within the Extractive Revenue Appendix (PDF) for additional background on the scoping process for USEITI.

In-scope government entities and revenue streams

Government entity In-scope revenue streams
DOI — ONRR
  • Bonuses
  • Rents
  • Royalties
  • Other revenue
  • Offshore inspection fees
  • Civil penalties
DOI — BLM
  • Bonus and first year rents
  • Permit fees
  • Renewable energy collections
DOI — OSMRE
  • Abandoned Mine Lands (AML) fees including audits and late charges
  • Civil penalties including late charges
IRS
  • Federal corporate income tax payments

In-scope reporting entities

The MSG identified that ONRR collects a majority of DOI’s extractive industries-related revenue. The MSG decided to use ONRR’s reported revenue as a proxy for DOI revenue to establish materiality thresholds for reporting. The MSG agreed on these thresholds because they would allow at least 80% of ONRR’s revenue to be in-scope for the reconciliation:

  • The MSG decided on a materiality threshold for the 2015 USEITI Report of $50 million total annual revenue reported to ONRR by a parent company, including its subsidiaries, which was presented and approved as part of the USEITI candidacy application (PDF). A more detailed analysis of ONRR revenue data revealed that this $50 million threshold resulted in 84% of ONRR revenue being in-scope for the reconciliation.
  • For the 2016 USEITI report, the MSG decided on a materiality threshold of ~$37.5 million total annual revenues reported to ONRR by a parent company, including its subsidiaries.

DOI’s unilateral disclosure covers 100% of revenue from all companies operating within the U.S.

In-scope companies (2015 report)

  • Alpha Natural Resources, Inc.
  • Anadarko Petroleum Corporation
  • ANKOR Energy LLC
  • Apache Corporation
  • Arch Coal, Inc.
  • Arena Energy, LLC
  • BHP Billiton LTD
  • BOPCO, LP
  • BP America
  • Chevron Corporation
  • Cimarex Energy Co.
  • Cloud Peak Energy Resources, LLC
  • Cobalt International Energy, Inc.
  • Concho Resources, Inc.
  • ConocoPhillips
  • Continental Resources, Inc.
  • Devon Energy Corporation
  • Encana Corporation
  • Energy XXI
  • EPL Oil & Gas, Inc.
  • ENI Petroleum
  • EOG Resources, Inc.
  • ExxonMobil Corporation
  • Fieldwood Energy LLC
  • Freeport-McMoRan Inc.
  • Hess Corporation
  • Linn Energy, LLC
  • LLOG Exploration Company LLC
  • Marathon Oil Company
  • Newfield Exploration Company
  • Noble Energy, Inc.
  • Oxy USA, Inc.
  • Peabody Energy Corporation
  • QEP Resources, Inc.
  • Repsol E&P USA Inc.
  • SandRidge Energy, Inc.
  • Shell E&P Company
  • Statoil Gulf of Mexico
  • Stone Energy Corporation
  • Talos Energy LLC
  • Ultra Resources Inc.
  • Venari Offshore LLC
  • W&T Offshore, Inc.
  • Walter Oil & Gas Corporation
  • WPX Energy, Inc.

In-scope companies (2016 report)

  • Alpha Natural Resources, Inc.
  • Anadarko Petroleum Corporation
  • Apache Corporation
  • Arch Coal, Inc.
  • Arena Energy, LLC
  • BHP Billiton LTD
  • BOPCO, LP
  • BP America
  • Chevron Corporation
  • Cimarex Energy Co.
  • Cloud Peak Energy Resources, LLC
  • Concho Resources, Inc.
  • ConocoPhillips
  • Continental Resources, Inc.
  • Devon Energy Corporation
  • Encana Corporation
  • Energy XXI
  • ENI Petroleum
  • EOG Resources, Inc.
  • EPL Oil & Gas, Inc.
  • ExxonMobil Corporation
  • Fieldwood Energy LLC
  • Freeport-McMoRan Inc.
  • Hess Corporation
  • Jonah Energy LLC
  • Linn Energy, LLC
  • LLOG Exploration Company LLC
  • Marathon Oil Company
  • Murphy Oil USA Inc.
  • Noble Energy, Inc.
  • Oxy USA, Inc.
  • Peabody Energy Corporation
  • QEP Resources, Inc.
  • Red Willow Offshore, LLC
  • Shell E&P Company
  • Statoil
  • Stone Energy Corporation
  • Talos Energy LLC
  • Ultra Resources Inc.
  • W&T Offshore, Inc.
  • WPX Energy, Inc.

Basis and period of reporting

Each report includes calendar year data:

  • For the 2015 report: the period of the reconciliation was CY 2013 (January 1, 2013 through December 31, 2013). Reporting companies and government entities reported data for payments made or reported in CY 2013.
  • For the 2016 report: the period of the reconciliation was CY 2015 (January 1, 2015 through December 31, 2015). Reporting companies and government entities reported data for payments made or reported in CY 2015.

The reporting currency for USEITI reports is US dollars (USD). Companies reported data at the consolidated entity level, including data for all identified subsidiary entities.

How did the Independent Administrator perform the reconciliation?

Based upon Requirement 5.1 of the EITI Standard, the IA performed the reconciliation of company payments and government revenue as follows:

Data collection

The reporting process included the following steps:

  • Reporting companies submitted completed reporting templates directly to the IA.
  • For all DOI revenue streams, ONRR managed the process of gathering data from each of the in-scope DOI bureaus and submitted the combined DOI bureau data to the IA for reconciliation.
  • For reporting companies that made the decision to allow for tax reconciliation, the IRS provided the data directly to the IA for reconciliation. Due to federal tax confidentiality laws, these reporting companies have to authorize the IRS to release corporate tax payment data to the IA through the use of IRS Form 8821.

The timing and process for each report were:

  • The 2015 USEITI reporting and reconciliation package was distributes to reporting companies on March 4, 2015 and included a cover letter summarizing the USEITI process, a Data Reporting Template (PDF), a reporting template guidelines document (PDF) with detailed reporting instructions, and IRS Form 8821 (PDF), which is required to authorize the IRS to disclose tax data to the IA for the reporting companies participating in reconciliation of taxes.
  • The IA distributed the USEITI reporting and reconciliation materials to in-scope companies on April 29, 2016, and the reporting period stayed open for just over 90 days.

Data reconciliation

The IA reconciled the data by comparing the reported amounts from reporting companies to the reported amounts from government entities and identifying any variance amounts. The IA then compared any variance amounts to an investigation threshold known as the Margin of Variance.

Margin of variance

The MSG considered and approved a Margin of Variance for the IA to apply during the reconciliation. The purpose of the Margin of Variance was to establish a threshold above which variances in reported payments required further evaluation. The MSG determined that variances below the Margin of Variance did not require further evaluation. Variances that were below the respective threshold were presented as-is, with no further consideration. Variances that exceeded the respective threshold were subject to further evaluation and explanation.

The MSG and the IA scoped out the potential causes of differences between amounts reported by in-scope reporting companies and government entities for each revenue stream included in the USEITI reconciliation process.

Three anticipated reasons for variance were:

  • Attributing payment information to different revenue streams
  • Recording a payment and a receipt of payment in different reporting periods
  • Reporting based on different sets of company payor entities

Based upon the type, magnitude, and likelihood of variances for in-scope revenue streams, a variance percentage threshold and a variance floor threshold were assigned to each revenue stream.

  • Variance percentage threshold: If the variance amount when divided by the amount reported by the government was greater than the variance percentage for that revenue stream, the IA considered the variance to exceed the threshold, and then assessed whether the variance floor threshold applied.
  • Variance floor threshold: This was the minimum dollar threshold for a variance and only applied if a variance exceeded the variance percentage threshold. If the variance exceeded the variance percentage threshold and exceeded the variance floor threshold, the IA performed further evaluation of the variance.

The table below outlines the Margin of Variance thresholds applied by the IA, which were approved by the MSG.

Margin of variance thresholds

Revenue stream Variance percentage Variance floor
ONRR royalties 1% $100,000
ONRR rents 2% $50,000
ONRR bonuses 2% $100,000
ONRR other revenue 3% $50,000
Offshore inspection fees 2% $20,000
Civil penalties 1% $1,000
BLM bonus and first year rentals 2% $10,000
BLM permit fees 3% $10,000
BLM renewables N/A N/A
OSMRE AML fees including audits and late charges 2% $100,000
OSMRE civil penalties including late charges 3% $0
Taxes 1% $100,000

Where variances were greater than margin of variance thresholds, the IA requested additional transaction-level details from the government entity and reporting company and attempted to identify potential sources of the variance.

After reviewing the data provided by both the government entity and the reporting company, if the IA was able to identify the potential source of the variance, the IA provided an explanation. If the IA was not able to identify the potential source of the variance, the IA provided an explanation that the source of the variance could not be resolved.

Both reporting companies and government entities were given the opportunity to revise their reported amounts when the reconciliation process identified the explanation for a variance, but restatement was not required. If a reporting company or government entity resubmitted revised numbers for a revenue stream, only the final submitted numbers are shown in the reconciliation results. In many cases, neither the government nor company chose to resubmit the numbers because the variance resulted from different business systems rather than a mistake.