DOME PETE<DMP> TAKES 2.08 BILLION DLR WRITEDOWN
Dome Petroleum Ltd, earlier
reporting a 2.20 billion dlr 1986 loss compared to year-earlier
profit of 7.0 mln dlrs, said the loss was mainly due to write
downs totalling 2.084 billion dlrs before a reduction in
deferred income taxes of 571 mln dlrs.
    The loss also includes 214 mln dlrs in accumulated foreign
exchange losses, the company said.
    "The dramatic drop in energy prices in early 1986 reverses
much of the progress the company has made in the two previous
years," Dome chairman J. Howard Macdonald said in a statement.
    "But even a net loss of this magnitude has very little
bearing on the day-to-day operations of Dome," chairman
Macdonald said.
    "It merely reflects the realistic carrying value of the
company's assets in today's economic environment, and the
absolute need for reaching a timely agreement with our lenders
on a debt restructuring plan to assure the company's continued
existence," he added.
    Dome is now trying to reach agreement on a complex plan for
restructuring debt of more than 6.10 billion dlrs.
    Dome said it charged the 214 mln dlrs in accumulated
foreign exchange losses to current expenses because of the
uncertainty arising from its proposed restructuring plan.
    Normally the expenses would be amortized over the remaining
period of the loans to which they apply, it said.
    Dome also said the write downs included a fourth quarter
reduction in the value of its oil and gas properties of 1.20
billion dlrs, before a reduction in deferred income taxes of
305 mln dlrs. The fourth quarter writedown was in addition to a
charge of 880 mln dlrs on certain other assets, taken mainly in
the third quarter.
    Dome said the 1.20 billion dlr fourth quarter charge
resulted from a year-end accounting change made under new full
cost accounting guidelines by the Canadian Institute of
Chartered Accountants.
    The company said it previously determined a write down of
conventional oil and gas properties was not required at
September 30, under the previous method of calculating the
limitation of oil and gas values.
    Dome said the most significant accounting change under the
new guidelines is using current oil and gas prices in
calculations instead of escalating price forecasts.
    Terms of Dome's proposed debt restructuring plan preclude
the company from making an accurate estimate of future
financing costs, which are used in the new accounting
calculations, it said.
    As a result, Dome adopted current prices and costs and a 10
pct discount factor in the calculations, which substantially
conform with accounting rules prescribed by the U.S. Securities
and Exchange Commission, the company said.
    Dome said operating income from its crude oil and natural
gas segments fell by 2.50 billion dlrs to a 1986 loss of 1.71
billion dlrs from prior year earnings of 737.0 mln dlrs.
    Dome said the steep drop in crude oil and natural gas
operating income was due to write downs totalling 1.93 billion
dlrs and lower energy prices that sharply reduced revenue.
    Reduced production of natural gas and lower utilization of
Dome's offshore drilling fleet in the Beaufort Sea also
contributed to the decline, it said.
    Earnings from its natural gas liquids business fell by 79
pct to 42.0 mln dlrs from 199 mln dlrs in 1985.
    Cash from operations dropped to 5.0 mln dlrs from year-ago
542.0 mln dlrs and unrestricted cash balance declined to 202.0
mln dlrs from 466.0 mln dlrs.
    Dome said 1986 crude oil production in 1986 was maintained
at prior year's levels through new drilling activity and
improvements in productivity.
    Natural gas production fell by nine pct as a result of
lower domestic and export sales, it said.
    Oil and field natural gas liquids production totalled
86,000 barrels a day, compared to 87,000 bpd in the prior year.
    Natural gas production fell to 536.0 mln cubic feet a day
from 591.0 mcf a day.
 Reuter
