RE:RE:RE:Q3 '21 Net Debt Down $50,203,000.00 From Q3 '20It is a non-cash item that is largely meaningless. Oil and Gas companies have to value ALL of their reserves every year based on pricing assumptions made at the time the valuation is done.If you go back through the annual reports, you will see this number flipping back and forth each year.
There was no reason to panic when Surge reported a massive loss in 2020 due to an impairment and there is no reason to celebrate when it appears to make a profit this year. What matters is how much actual cash the company is able to generate. That's why no one who understands the O&G business spends much time looking at the Income Statement and instead moves quickly to the Cash Flow Statement.
But, yes ... This is exactly like pricing and selling running shoes.
geezer21 wrote: https://stockhouse.com/companies/bullboard/t.sgy/surge-energy-inc?postid=34133570
"As for the difference in Earnings between years, that's primarily due to a reversal in an impairment charge due to changes in reserve valuations due to price differences between March 2020 and March 2021." - Kontrary
A reversal in an asset is an increase wealth. The rise in oil prices made Surge's properties valuable again. That is worth money. An asset that appreciates is a gain in wealth. Does not matter if it is cash, diamonds, paintings, oil, copper, land, building, running shoes or whatever.
Just like Converse All-Star running shoes that lost value only to regain value after Nike, seeing there was a generational change in foot wear tastes, bought out the bankrupt Converse Company in 2001 and revived the brand. All-Stars sell for $70 now, almost as much as a barrel of oil.
The value of the Converse brand revived because of a new generation with changing tastes created demand for Converses just as the value of Surge's oil assets revived with increasing demand for oil with tight supply.
https://www.chucksconnection.com/history1.html