2.0.0.10 false Note 24 - Accounting for Suspended Exploratory Wells 00923 - Disclosure - Note 24 - Accounting for Suspended Exploratory Wells true false false false 1 usd $ false false Dollars Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 Shares Standard http://www.xbrl.org/2003/instance shares xbrli 0 2 Notes to Financial Statements [Abstract] 0 pbra_NotesToFinancialStatementsAbstract pbra false na duration string No definition available. false false false false false true false false false false false false 1 false false false false 0 0 false false false No definition available. false 3 Note 24 - Accounting for Suspended Exploratory Wells 1 us-gaap_SuspendedWellCostsDisclosureTextBlock us-gaap true na duration string No definition available. false false false false false false false false false false false false 1 false false false false 0 0 <div style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%"> <p style="TEXT-ALIGN: left"><b>24. Accounting for Suspended Exploratory Wells</b></p> <p style="TEXT-ALIGN: justify; MARGIN-LEFT: 0.2in">The Companys accounting for exploratory drilling costs is governed by Codification Topic 932  Extractive Activities  Oil and Gas. Costs the Company has incurred to drill exploratory wells that find commercial quantities of oil and gas are carried as assets on its balance sheet under the classification Property, plant and equipment as unproved oil and gas properties. Each year, the Company writes-off the costs of these wells that have not found sufficient proved reserves to justify completion as a producing well, unless: (1) the well is in an area requiring major capital expenditure before production can begin; and (2) additional exploratory drilling is under way or firmly planned to determine whether the capital expenditure is justified.</p> <p style="TEXT-ALIGN: justify; MARGIN-LEFT: 0.2in">As of December 31, 2009, the total amount of unproved oil and gas properties was US$5,902, and of that amount US$3,810 (US$2,205 of which related to projects in Brazil) represented costs that had been capitalized for more than one year, which generally are a result of: (1) extended exploratory activities associated with offshore production; and (2) the transitory effects of deregulation in the Brazilian oil and gas industry, as described below.</p> <p style="TEXT-ALIGN: justify; MARGIN-LEFT: 0.2in">In 1998, the Companys government-granted monopoly ended and the Company signed concession contracts with the Agência Nacional de Petróleo (National Petroleum Agency, or ANP) for all of the areas the Company had been exploring and developing prior to 1998, which consisted of 397 concession blocks. Since 1998, the ANP has conducted competitive bidding rounds for exploration rights, which has allowed the Company to acquire additional concession blocks. After a concession block is found to contain a successful exploratory well, the Company must submit an Evaluation Plan to the ANP for approval. This Evaluation Plan details the drilling plans for additional exploratory wells. An Evaluation Plan is only submitted for those concession areas where technical and economic feasibility analyses on existing exploration wells evidence justification for completion of such wells. Until the ANP approves the Evaluation Plan, the drilling of additional exploratory wells cannot commence. If companies do not find commercial quantities of oil and gas within a specific time period, generally 4-6 years depending on the characteristics of the exploration area, then the concession block must be relinquished and returned to the ANP. Because the Company was required to assess a large volume of concession blocks in a limited time frame even when an exploratory well has found sufficient reserves to justify completion and additional wells are firmly planned, finite resources and expiring time frames in other concession blocks have dictated the timing of the planned additional drilling.</p> </div> <div style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%"> <p style="TEXT-ALIGN: justify; MARGIN-LEFT: 0.2in">The following table shows the net changes in capitalized exploratory drilling costs during the years ended December 31, 2009 and 2008:</p> <div align="left"> <table style="WIDTH: 100%; FONT-FAMILY: ''''''''''''''''Times New Roman''''''''''''''''; FONT-SIZE: 9pt" border="0" cellspacing="0"> <tr> <td></td> <td width="2%"></td> <td width="15%"></td> <td width="2%"></td> <td width="15%"></td> </tr> <tr valign="bottom"> <td style="BORDER-BOTTOM: #000000 1px solid" colspan="5" align="center"><b>Unproved oil and gas properties (*)</b></td> </tr> <tr> <td colspan="5"></td> </tr> <tr valign="bottom"> <td align="left"> </td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" colspan="3" align="center"><b>Year ended December, 31</b> </td> </tr> <tr valign="bottom"> <td align="left"> </td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-INDENT: 4px" align="center"><b>2009</b> </td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" align="center"><b>2008</b> </td> </tr> <tr> <td colspan="5"> </td> </tr> <tr valign="bottom"> <td style="BACKGROUND-COLOR: #cceeff; TEXT-INDENT: 1px" align="left">Beginning balance at January 1 </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right"><b>3,558</b></td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">2,627</td> </tr> <tr valign="bottom"> <td align="left">Additions to capitalized costs pending determination of proved reserves </td> <td> </td> <td align="right"><b>3,383</b></td> <td> </td> <td align="right">3,308</td> </tr> <tr valign="bottom"> <td style="BACKGROUND-COLOR: #cceeff; TEXT-INDENT: 1px" align="left">Capitalized exploratory costs charged to expense </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right"><b>(1,251<b>)</b></b></td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">(808)</td> </tr> <tr valign="bottom"> <td align="left">Transfers to property, plant and equipment based on the determination of the proved reserves </td> <td> </td> <td align="right"><b>(613<b>)</b></b></td> <td> </td> <td align="right">(1,309)</td> </tr> <tr valign="bottom"> <td style="BACKGROUND-COLOR: #cceeff; TEXT-INDENT: 1px" align="left">Cumulative translation adjustment </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BORDER-BOTTOM: #000000 1px solid; BACKGROUND-COLOR: #cceeff" align="right"><b>825</b></td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BORDER-BOTTOM: #000000 1px solid; BACKGROUND-COLOR: #cceeff" align="right">(260)</td> </tr> <tr valign="bottom"> <td style="TEXT-INDENT: 1px" align="left">Ending balance at December 31, </td> <td> </td> <td style="BORDER-BOTTOM: #000000 3px double" align="right"><b>5,902</b></td> <td> </td> <td style="BORDER-BOTTOM: #000000 3px double" align="right">3,558</td> </tr> <tr> <td style="BACKGROUND-COLOR: #cceeff" colspan="5"> </td> </tr> <tr valign="bottom"> <td colspan="5" align="left">(*) Amounts capitalized and subsequently expensed in the same period have been excluded from the above table. </td> </tr> </table> </div> <p style="MARGIN: 0px"> </p> <p style="TEXT-ALIGN: justify; MARGIN-LEFT: 0.2in">The following table provides an aging of capitalized exploratory well costs based on the date the drilling was completed and the number of projects for which exploratory well costs have been capitalized for a period greater than one year since the completion of the drilling:</p> <div align="left"> <table style="WIDTH: 100%; FONT-FAMILY: ''''''''''''''''Times New Roman''''''''''''''''; FONT-SIZE: 9pt" border="0" cellspacing="0"> <tr> <td></td> <td width="2%"></td> <td width="15%"></td> <td width="2%"></td> <td width="15%"></td> </tr> <tr valign="bottom"> <td style="BORDER-BOTTOM: #000000 1px solid" colspan="5" align="center"><b>Aging of capitalized exploratory well costs</b></td> </tr> <tr> <td colspan="5"></td> </tr> <tr valign="bottom"> <td align="left"> </td> <td> </td> <td colspan="3" align="center"><b>Year ended</b> </td> </tr> <tr valign="bottom"> <td align="left"> </td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" colspan="3" align="center"><b>December 31,</b> </td> </tr> <tr valign="bottom"> <td align="left"> </td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" align="center"><b>2009</b> </td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" align="center"><b>2008</b> </td> </tr> <tr> <td colspan="5"> </td> </tr> <tr valign="bottom"> <td style="BACKGROUND-COLOR: #cceeff" align="left">Capitalized exploratory well costs that have been capitalized for a period of one year or less </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right"><b>2,092</b> </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">2,682 </td> </tr> <tr valign="bottom"> <td align="left">Capitalized exploratory well costs that have been capitalized for a period greater than one year </td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" align="right"><b>3,810</b> </td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" align="right">876 </td> </tr> <tr valign="bottom"> <td style="BACKGROUND-COLOR: #cceeff" align="left">Ending balance </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BORDER-BOTTOM: #000000 1px solid; BACKGROUND-COLOR: #cceeff" align="right"><b>5,902</b> </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BORDER-BOTTOM: #000000 1px solid; BACKGROUND-COLOR: #cceeff" align="right">3,558 </td> </tr> <tr valign="bottom"> <td align="left">Number of projects that have exploratory well costs that have been capitalized for a period greater than one year </td> <td> </td> <td style="BORDER-BOTTOM: #000000 3px double" align="right"><b>95</b> </td> <td> </td> <td style="BORDER-BOTTOM: #000000 3px double" align="right">83 </td> </tr> </table> </div> <p style="MARGIN: 0px"> </p> </div> <div style="PADDING-LEFT: 0%; PADDING-RIGHT: 0%"> <p style="TEXT-ALIGN: justify; MARGIN-LEFT: 0.2in">Of the US$3,810 for 95 projects that include wells suspended for more than one year since the completion of drilling, approximately US$681 are related to wells in areas for which drilling was under way or firmly planed for the near future and that the Company has submitted an Evaluation Plan to the ANP for approval and approximately US$1,446 incurred in costs for activities necessary to assess the reserves and their potential development.</p> <p style="TEXT-ALIGN: justify; MARGIN-LEFT: 0.2in">The US$3,810 of suspended wells cost capitalized for a period greater than one year as of December 31, 2009, represents 140 exploratory wells and the table below contains the aging of these costs on a well basis:</p> <p style="TEXT-ALIGN: justify; MARGIN-LEFT: 0.2in">Aging based on drilling completion date of individual wells:</p> <div align="left"> <table style="WIDTH: 100%; FONT-FAMILY: ''''''''''''''''Times New Roman''''''''''''''''; FONT-SIZE: 9pt" border="0" cellspacing="0"> <tr> <td></td> <td width="2%"></td> <td width="13%"></td> <td width="2%"></td> <td width="13%"></td> </tr> <tr valign="bottom"> <td align="left"> </td> <td> </td> <td align="center"><b>Million</b> </td> <td> </td> <td align="center"> </td> </tr> <tr valign="bottom"> <td align="left"> </td> <td> </td> <td align="center"><b>of</b> </td> <td> </td> <td align="center"><b>Number</b> </td> </tr> <tr valign="bottom"> <td align="left"> </td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" align="center"><b>dollars</b> </td> <td> </td> <td style="BORDER-BOTTOM: #000000 1px solid" align="center"><b>of wells</b> </td> </tr> <tr valign="bottom"> <td style="BACKGROUND-COLOR: #cceeff" align="left">2008 </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">1,730 </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">73 </td> </tr> <tr valign="bottom"> <td align="left">2007 </td> <td> </td> <td align="right">723 </td> <td> </td> <td align="right">30 </td> </tr> <tr valign="bottom"> <td style="BACKGROUND-COLOR: #cceeff" align="left">2006 </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">741 </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BACKGROUND-COLOR: #cceeff" align="right">16 </td> </tr> <tr valign="bottom"> <td align="left">2005 </td> <td> </td> <td align="right">284 </td> <td> </td> <td align="right">18 </td> </tr> <tr valign="bottom"> <td style="BACKGROUND-COLOR: #cceeff" align="left">2004 and therefore </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BORDER-BOTTOM: #000000 1px solid; BACKGROUND-COLOR: #cceeff" align="right">332 </td> <td style="BACKGROUND-COLOR: #cceeff"> </td> <td style="BORDER-BOTTOM: #000000 1px solid; BACKGROUND-COLOR: #cceeff" align="right">3 </td> </tr> <tr valign="bottom"> <td align="left"> </td> <td> </td> <td style="BORDER-BOTTOM: #000000 3px double" align="right">3,810 </td> <td> </td> <td style="BORDER-BOTTOM: #000000 3px double" align="right">140 </td> </tr> </table> </div> <p style="MARGIN: 0px"></p> </div> 24. Accounting for Suspended Exploratory Wells The Companys accounting for exploratory drilling costs is governed by Codification Topic 932  false false false This block of text may be used to disclose parts or all of the information related to suspended well costs. Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name FASB Staff Position (FSP) -Number FAS19-1 -Paragraph 10 false false 1 2 false UnKnown UnKnown UnKnown false true