Capital/Depletion Allowance - Oil &Gas
Dear all,
I am trying to do a valuation of a gas well. I know that you can use the unit of production method to calculate a capital/depletion allowance for every year based on D&C Capex * Production Year X / Total Expected Production.
Well now, I am not totally sure whether you can only use D&C Capex. At the end of the well's life, there are also abandonment costs and I was wondering if they should also be included into capital allowance.
In this context I am working on the US, but I am also interested if capital allowance would be calculated the same way in Europe.
Thank you.