Navigating unclaimed property risk to unlock oil and gas deal value 

After years of cost-tightening, bankruptcies and regulatory pressure, the oil and gas (O&G) industry is back in growth mode. Surging optimism, improved cash flow and a friendlier policy environment are fueling a spike in merger and acquisition (M&A) activity. But while producers are busy repositioning and expanding, there’s a risk flying under the radar — unclaimed property (UP). And it’s not just a paperwork problem. Missed liabilities from unrecovered mineral interests, dormant balances, or aged checks could cost acquirers millions.

The Comeback Trail

O&G producers spent the past several years cutting costs, shedding non-core assets and restructuring. Those that survived the downturn are now reaping the benefits of tighter operations. With a stronger balance sheet, many are turning to M&A to strengthen core production areas and shed lingering distractions. That’s the good news.

The not-so-good news: this renewed deal activity is quietly dragging a persistent liability back into focus. Revenue suspense balances — essentially funds owed to owners of mineral interests but stuck in limbo — can turn into unclaimed property if left unresolved too long. And that can trigger compliance obligations, audits, penalties and painful post-deal surprises.

What is unclaimed property?

Every U.S. state (and several Canadian provinces) requires companies to report unclaimed property — funds owed to someone else that have gone unclaimed for a statutory “dormancy” period. These obligations are not taxes, but they are legally binding and failure to report can lead to audits and steep penalties.

Common examples include uncashed checks, customer credits and for O&G companies, revenue suspense balances. These often arise when royalty owners pass away, interests are tied up in probate, or mailing information is incomplete.

The rules are complex. Priority rules dictate where property should be reported — first to the owner’s last known address and if that’s unknown, to the company’s state of incorporation. Some states have even more nuanced rules for oil production proceeds.

M&A meets unclaimed property

Unclaimed property exposure becomes particularly risky in the context of M&A.

In a stock acquisition, a buyer inherits all assets and liabilities — whether known or not. In theory, buyers expect this and conduct robust diligence. In practice, unclaimed property often gets overlooked, especially suspense balances buried in outdated systems or tied to decades-old transactions.