NEW YORK, April 7 (Reuters) - SandRidge Energy Inc’s letter asking the IRS whether its water disposal business qualifies as tax-free for inclusion in a possible master limited partnership (MLP) has been caught up in an agency’s pause of such reviews.
“That process has started and there was the pause,” Duane Grubert, SandRidge’s head of investor relations told investors at the OGIS energy conference in New York on Monday.
Grubert estimated the delay could last for months. SandRidge is exploring ways, including forming an MLP, to unlock the value of its fracking water disposal business it estimates has a value around $1 billion.
The law firm Vinson & Elkins told its clients in recent days that the Internal Revenue Service is reviewing the scope of assets that can qualify as tax-free for MLPs and ‘pausing’ the issuance of private letter rulings that companies normally ask for when setting up the structures.
The IRS did not comment.
Reporting by Anna Driver in New York, Edited by Eileen O'Grady