Newspaper article THE JOURNAL RECORD

Alexander Reserves to Yield 37.4% Less

Newspaper article THE JOURNAL RECORD

Alexander Reserves to Yield 37.4% Less

Article excerpt

Despite an increase in total volumes of proved oil and gas reserves, Alexander Energy Corp. of Oklahoma City expects to re alize 37.4 percent less in future net revenues, down to $33.6 million from $53.7 million in last year, the company said Wednesday.

However, the firm will not have to take a write-down in reserve values, because its costs remain lower than its assets, said David Bole, vice president and chief financial officer.

Alexander Energy's proved oil reserve as of March 31 totaled 1.3 million barrels, up 7 percent from 1.2 million barrels in 1985. Gas reserves declined 10 percent to 24.2 billion cubic feet from 26.9 billion.

Due to price declines in both oil and gas, the company reported it expects to realize future net revenues of $33.6 million from these reserves on a non-escalated, discounted basis.

A year ago, it was looking forward to net revenues of $53.7 million, the firm said.

On an escalated, non-discounted basis, future net revenues are estimated to have declined 12.4 percent to $91.5 million from $104.5 million at the close of fiscal 1985.

Alexander Energy's fiscal year ends in March instead of on a calendar year basis. Some companies reporting financial results for the fiscal year ending in March suffered severe declines in revenuesbecause of falling oil prices in the last quarter of their fiscal year.

Such companies were also faced with writing down the values of their reserves at less than half of what companies ending fiscal years Dec. 31 valued reserves.

"We were fortunate," Bole said, "that our cost basis is lower than the value of the reserves. We didn't have to take a write down."

The Securities and Exchange Commission had considered allowing the companies some leeway in valuing their reserves but instead voted to require value to be set at present prices.

That forces any company whose costs, under Full Cost accounting methods, are higher than its assets valued at market levels, to devalue its reserves. …

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