Herberger Oil & Gas Company paid \($10\) million for the drilling rights to a 1,000 acre tract of land near Midland, Texas. On the basis of several exploratory wells that had cost an aggregate of \($400,000\) to drill, petroleum engineers estimated that the tract of land might contain as much as 500,000 barrels of oil. Four additional development wells were drilled at a cost of approximately \($200,000\) each. Calculate the depletion expense for the first year assuming that 100,000 barrels are extracted. Calculate the depletion expense for the second year assuming that 150,000 barrels are extracted. What is the cost basis of the remaining reserves at the end of the second year?