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Gold/Mining/Energy : Canadian Oil & Gas Companies -- Ignore unavailable to you. Want to Upgrade?

To: VisionsOfSugarplums who wrote (6778)	8/28/1999 7:12:00 PM
From: Richard Saunders	Read Replies (1) \| Respond to of 24921

toowit - ceiling tests. That brings up another ponder. Last December a bunch of the situations fooling with the medium & heavier grades of oil looked to see where the benchmark West Texas Intermediate price was at and did the old number-crunch thing. WTI price was applied against indicated oil reserves. In quite a few situations it was determined that the then price of oil couldn't economically justify calling previously classed oil reserves - both proved and probable - as ASSETS. Price of oil just wouldn't make it economically worthwhile. As you know, quite a few situations did the expected accounting move and there was a large sucking sound that happened. Actually the sound was more of a swish than a suck........ a paper-exercise occurred and companies wrote-off previously booked reserves/values. Values that previously appeared on the asset side of the balance sheet swished over to the depletion/depreciation and "write-down in carrying value of capital assets" columns on Consolidated Statement of Cash Flows. Many "Reports to Shareholders" mentioned these actions and Notes to Consolidated Financial Statements went into a bit more detail regarding re-classed and written down assets. Looking in the forward-view direction it now could be argued that come December 31, 1999 the price of West Texas Intermediate will likely be quite a bit higher than the 1998 year-end. What then? Is it a big deal for companies to suddenly re-book previously written down (off) oil reserves? If so, this may make for some "interesting" situations........ also suspect the financings machines are going to get majorly kick-started again between now and year-end for quite a few juniors. Interesting days ahead. Enjoy it while it's here.............