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Gold/Mining/Energy : Big Dog's Boom Boom Room

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To: Taikun who wrote (40866)	3/26/2005 6:02:59 PM
From: Ed Ajootian	Read Replies (1) of 206287

Taikun, thanks most kindly, those links were most helpful. Now I see why I couldn't replicate the info, I was using EBITDA in the numerator vs. profit pre-tax and before interest. At first I thought that for oil & gas companies it might make more sense to use EBITDA in the numerator, but the more I think about it its better to use the results after depreciation expense. Today many companies are going nutty drilling in areas and ways that really aren't all that economic, and its reflected in their DD&A rates. By charging the numerator with DD&A these companies get appropriately penalized in their ROCE calc. TMR's DD&A rate broke through the $3 mark in 4Q, for example.

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