Here is an exerpt from one of my previous posts on the subject of "Hedging" oil. It has nothing to do with "Tanking" numbers.
"Secondly, the production numbers on the KGS site are far from accurate for any oil company listed. The numbers are not for that purpose specifically on this site. They receive ALL of their production data from the Dept. of Revenue. The site does not take into account "Hedged Oil." A practice nearly all companies engage in, especially the smaller ones.
I called the Coffyville Refinery for an explanation of this practice as it relates to the KGS site. I was told that a small oil company can pre-sell so many barrels of oil to the refinery or Hedge the oil. The refinery will cut a check out to that company and collect the agreed upon barrels of oil in the future. Now, the small oil company pays taxes on the amount of money they receive from the refinery. The refinery will then pay the taxes on the barrels of oil they collect later on per the agreement. Thus, those barrels of oil will not be attributed to the oil company since as far as the Dept. of Revenue is concerned were never theirs to be taxed.
The taxes for a company hedging oil are on the proceeds from the pre-sale, not the oil itself. They said the KGS site registers taxed barrels of oil from oil producers but in no way is it an accurate tally for companies hedging oil."
