Property And Equipment

3 Months Ended

Mar. 31, 2014

Property and Equipment [Abstract]

Property And Equipment

Note 3–  Property and Equipment

Property and equipment included the following at the dates indicated below:

		March 31,		December 31,
		2014		2013
Oil and gas properties under the full cost method:
Subject to amortization	$	1,102,962	$	1,084,669
Not subject to amortization:
Incurred in 2014		23,041		-
Incurred in 2013		37,936		52,748
Incurred in 2012		134,287		138,641
Incurred prior to 2012		175,551		177,271
		1,473,777		1,453,329
Computers, furniture and fixtures		8,733		8,734
Total property and equipment		1,482,510		1,462,063
Accumulated depreciation, depletion and amortization		(428,735)		(389,912)
Net property and equipment	$	1,053,775	$	1,072,151

The costs not subject to amortization include:

· values assigned to unproved reserves acquired;

· exploration costs such as drilling costs for projects awaiting approved development plans or the determination of whether or not proved reserves can be assigned; and

· other seismic and geological and geophysical costs.

These costs are transferred to the amortization base when it is determined whether or not proved reserves can be assigned to such properties.  This analysis is dependent upon well performance, results of infield drilling, approval of development plans, drilling results and development of identified projects and periodic assessment of reserves.  We expect acquisition costs and exploration costs excluded from amortization to be transferred to the amortization base over the next three years due to a combination of well performance and results of infield drilling relating to currently producing assets and the drilling and development of identified projects, such as the Rochelle field.  Because of the nature of offshore oil and gas activities, development activities, including sanctioning and regulatory approvals, may take a significant amount of time to implement.  Even though our expectation is that most costs not subject to amortization are to be transferred to the amortization base over the next two years, it is not uncommon for the cycle times to be longer.  We have one U.K. field, Columbus, where costs have been excluded from amortization for greater than five years; however, we continue to work on the development planning for the field.

For the three months ended March 31, 2014and 2013, we capitalized $2.6 million and $6.2 million, respectively, in interest related to exploration and development, primarily related to our U.K. activities. For the three months ended March 31, 2014 and 2013, we capitalized $3.1 million and $5.1 million, respectively, in certain directly related employee costs. 

We did not have an impairment of U.S.  oil and gas properties through the application of the full cost ceiling test at the end of the first quarter of 2014, which utilized prices of $98.43 per barrel for oil and $3.99 per Mcf for gas.  We did not have an impairment of U.K. oil and gas properties through the application of the full cost ceiling test at the end of the first quarter of 2014, which utilized prices of $107.06 per barrel for oil and $10.57 per Mcf for gas.

For the  first quarter of 2013, we recorded a pre-tax impairment of $3.5 million related to our U.S. oil and gas properties through the application of the full cost ceiling test at the end of the quarter.  The prices used to determine the impairment for our U.S. properties were $92.63 per barrel for oil and $2.97per Mcf for gas. We did not have an impairment of U.K. oil and gas properties through the application of the full cost ceiling test at the end of the first quarter of 2013, which utilized prices of $110.49 per barrel for oil and $9.71 per Mcf for gas.