1. Sirius Solutions | 1233 West Loop South, Suite 1800 | Houston, TX 77027-9160 | (800) 234-8054 | www.sirsol.com
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Challenge
An E&P client monetized their mid-stream operations and asked Sirius to assist in the financial
statement preparation and reporting process. When the process was finalized, the client completed
an initial public offering (IPO) for certain discreet assets in the form of a Master Limited Partnership
(MLP) and leveraged the remaining midstream assets with a long-term debt facility. The remaining
“non-MLP” assets were reorganized into a wholly-owned subsidiary specifically created to comply
with loan agreement reporting requirements.
Following the IPO, the client’s operational plan was to drop down acquired assets from the sponsor
into the MLP. The client requested that we provide financial reporting assistance to help them with
the carve-out accounting, external auditor requests, financial reporting, compliance with GAAP and
disclosure of assets acquired from the sponsor and dropped down into the MLP.
Solution
Sirius implemented a two team approach to address:
Financial Review and Analysis
The team was led by a Sirius Director with more than 20 years of upstream and midstream energy
industry financial reporting experience. Sirius prepared the wholly-owned sub’s financial statements
of the MLP and non-MLP assets and assisted in its first-time financial statement audits. Sirius also
assisted our client in a “cradle to grave” capacity from the drafting of the SEC pre-clearance letter
through registration statement preparation to MLP effectiveness. Sirius became management’s
advocate by facilitating responses to all aspects of the external auditor requests such as sample
information, prepared by client requests, and gathering of credible evidentiary support for tie-out
binders. Sirius efficiently collaborated with client personnel in order to ensure timely completion of
workstream milestones and minimal disruption of the client’s ongoing activities.
Financial Reporting
The team was led by a Sirius Director with more than 20 years of upstream and midstream energy
industry financial reporting experience. Sirius performed SEC Reg. S-X 3-05 assessments for the
target acquisition, completed the associated carve-out accounting work for the acquired assets to be
conveyed to the MLP, drafted the associated disclosures for SEC Form 8-K filings (including related
pro forma financials), and facilitated the necessary integration of the carve-out’s historical financial
information into the MLP. Additionally, Sirius drafted SEC Form 8-K for the recasting of the prior
year’s annual report, originally filed on SEC Form 10-K. The Sirius team developed a methodology
to incorporate and improve this carve-out accounting process that ensured a timely and efficient
close of deliverables to the client.
Sirius Solutions – Master Limited Partnerships IPO and Dropdown
Case Study