Hi Marcos,FYI, here's the related newsrelease from COP which precipitated Fitch's reporting:http://www.conocophillips.com/newsroom/news_releases/2009new...Based on the amount, it seems they basically wiped out whatever they had in goodwill on the balance sheet, and property/plant assets took a hit too. What has happened is that the deep fall off in energy prices (both natural gas and oil) and the share prices of all energy companies (particularly those of LUKOIL which is a public company too and COP has a 20% ownership stake, iirc) has caused COP to writedown the book value primarily of two major assets:a) their LUKOIL stakeb) their book value of the Burlington Resources acquisition. BR was purchased several years ago at a little better than $3.00 per mmcf if memory serves. The recent large drop in natural gas prices is to blame here.COP has basically marked-to-market these assets. Because of the steep fall off in both oil and natural gas prices these assets are less valuable in the market place currently. There is the same amount of oil and natural gas in the ground, that much hasn't changed (although the lower prevailing pricing makes it uneconomical to recover a small portion of COP's reserves and that has resulted in the reduction in proved reserves noted in the release). Given current market prices and accounting rules, the write-downs were necessary.Suppose you bought two stocks at this time last year. Accounting rules would require you to report the current market value on your balance sheet (which is likely 25 to 35% less than what you paid for them) regardless of whether or not you intended to sell those shares. Your book value today would be based on the current market quotation.All of this should not sway you in your thinking about a potential purchase of COP. What is much more important to this decision is your long term outlook for the prices of oil and natural gas and your confidence in COP's management to steer the company adequately and in the best interest of shareholders.Fwiw, I think COP is a great buy under $50. However, it may be a little early as lower prices may lie ahead. Or, maybe not.Richps: Long COP
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