Quote:
Originally Posted by Ducay
Non-cash impairments are literally to reflect future economics, but I do agree generally they dont result in layoffs, just more an indication future jobs wont be created.
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Yes and no, all they are saying is that the current NBV of their PPE is not supported by their reserve evaluations which are a point in time test. These tests are super sensitive to discount rates and the forward strip in which they are using. I also find reserve evaluators strips are typically less accurate than the actual forward strip and the bank's strips.
I won't bore everyone but your NBV of your PPE includes random items such as asset retirement obligations, capitalized G&A, overhead allocations, etc. To effectively 'accelerate' their depletion through impairment does not necessarily mean their economics are in turmoil.