Depletion Is Not a Problem for Northern Oil and Gas, Mark to Market Oil Hedges Are
Michael Filloon submits: Recent questions about Northern Oil and Gas (NOG) have caused a pullback in shares. These questions (part 1 and part 2) followed a Barron's article about insider selling. The bears timed this well as Northern had outrun valuation in the short term, and was due for a pullback. Street Sweeper and Bronte Capital stated they were short the stock. It seemed the Street Sweeper articles focused on colorful language, with little focus on economics . One question I found troublesome addressed depletion. Depletion, much like depreciation, allows the oil company to account for the reduction of a commodity's reserves. There are two types of calculations for depletion. The first is percentage depletion, calculated by a set percentage multiplied by the gross income from the property. The second is cost depletion, which looks at the total amount of resource to be extracted, how much was extracted during the tax year, andComplete Story »
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