Producers’ assets not worth as much as they thought
Tuesday, August 18, 2015
The trend has been evident in most oil and gas drilling companies: prolonged depressed commodity prices has producers cutting back on rigs, employees and production in order to make ends meet. Pittsburgh Post-Gazette PowerSource reports that companies taking impairments worsen their financial situations.
Impairments are a company’s reduction in capital. In other words, when a company’s actual cash from a development is lower than the company’s assets calculation, the company reports an impairment. Impairments are common nowadays while prices sink.
Some Pittsburgh-area oil and gas operators have reported impairments. Rex Energy, for example, had $117.8 million in impairments for the second quarter alone. Consol Energy Inc. reported a second quarter impairment of $828.9 million.
Via: Pittsburgh Post-Gazette PowerSource > When prices tank, write downs flourish
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Depending on the company, royalty payments can arrive monthly or quarterly.
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