Oil and Gas CPA Services in Houston

Oil and gas accounting is its own discipline. Working interests, royalty interests, intangible drilling costs, depletion, percentage vs cost method, partnership K-1s with a dozen specialty boxes — the rules don’t translate cleanly from general business accounting. For Houston operators, investors, and service companies, getting the tax side wrong leaves real money on the table or invites IRS scrutiny. Whetzel & Co works with oil and gas clients across the Houston metro who need a CPA who actually understands the industry.

Who we serve in Houston’s oil and gas sector

Working interest investors — passive and active, with deductions for IDC, dry hole costs, and depletion
Royalty interest holders — mineral rights owners receiving monthly royalty checks needing proper Schedule E reporting
Independent operators — small to mid-size production companies running their own wells
Oilfield service companies — well servicing, drilling support, transportation, fabrication shops
Energy partnerships and joint ventures — including DPP and private placements
Mineral rights inheritance situations — estates and trusts holding oil and gas interests

Tax issues unique to oil and gas

Intangible drilling costs (IDC)

One of the most powerful deductions in the code. Working interest owners can elect to deduct IDC currently rather than capitalize, accelerating significant tax benefit in the drilling year. The rules around eligibility, election timing, and recapture are specific. Most generalist CPAs handle this incorrectly or miss it entirely.

Depletion

Two methods — cost depletion and percentage depletion (15% for qualifying small producers). Calculating which produces a better result requires an actual analysis. The percentage depletion has limits based on net income and 65% of taxable income that catch people every year.

Working interest vs royalty interest classification

Working interests are generally subject to self-employment tax and qualify for IDC. Royalty interests are not. Mischaracterizing income between these affects FICA, retirement plan contributions, and overall tax structure.

K-1 complexity

Oil and gas partnership K-1s frequently include items in 10+ boxes — ordinary income, separately stated capital gains, IDC deductions in box 13, depletion in box 17, plus nonconventional fuel credits, EOR credits, and Section 1231 items. Reading one correctly is the difference between a return that reflects the economics and one that overstates income by five figures.

State and local considerations

Texas franchise tax has specific rules for oil and gas operators. Production tax (severance tax) interactions with federal returns are an area many CPAs handle generically. Property tax on operational equipment requires careful tracking.

Common Houston oil and gas tax situations we handle

You bought working interests through a private placement and need someone to evaluate the K-1 properly
You own mineral rights inherited from a relative and aren’t sure how to report royalty income
You operate a small oilfield service company and want to know if S-corp election makes sense
You’re considering a 1031 exchange of mineral rights or operational property
Your existing CPA doesn’t understand depletion and you suspect you’re overpaying
You need representation in an IRS audit involving oil and gas deductions

Why specialized industry knowledge matters

I’ve seen Houston families inherit mineral rights and treat the income as straight rental property. I’ve seen working interest investors miss IDC elections worth tens of thousands. I’ve seen oilfield service companies stay on Schedule C when S-corp election would save $15,000 a year. The pattern: a generalist CPA does adequate work for most clients, then encounters an oil and gas situation and treats it like the rest of the practice. That’s where money gets left on the table.

What working with us looks like

We start with a free consultation reviewing your current situation: what entities you have, what’s on your K-1s, what your prior returns look like. Often we find immediate opportunities — an unclaimed IDC deduction, a depletion election, a basis tracking issue. From there we build an annual rhythm: tax planning meetings in May and November, return preparation timed to your investment K-1 schedule, and ongoing availability for questions when transactions arise. We coordinate with your investment partnerships’ general partners directly so you don’t have to chase K-1s yourself.

Pricing

Engagement fees vary by complexity. A return with 2-3 oil and gas K-1s plus standard income items is typically $1,500-$2,500. Active operator returns with operational complexity run higher. We provide written engagement letters with fees agreed before work begins — no surprise invoices.

Houston metro coverage

We work with oil and gas clients across the Greater Houston area including Houston, Katy, Sugar Land, Richmond, Rosenberg, The Woodlands, Spring, and Pearland. Most engagements happen virtually with periodic in-person meetings as needed.

Get started

If you have oil and gas income on your tax return and aren’t 100% confident your current CPA is handling it correctly, the cheapest insurance you can buy is a second opinion. Call (832) 594-0339 or use the contact page to schedule a free 30-minute review of your situation. We’ll tell you straight whether there’s opportunity worth pursuing.

Related industries we serve

We also serve specialty CPA needs in these Houston-area industries: