Exploratory well costs

6 Months Ended

Jun. 30, 2017

Disclosure Exploratory Well Costs Capitalized Exploratory Well Activity [Abstract]

Note 3. Exploratory well costs

The Company capitalizes exploratory well costs until a determination is made that the well has either found proved reserves or that it is impaired. After an exploratory well has been completed and found oil and natural gas reserves, a determination may be pending as to whether the oil and natural gas reserves can be classified as proved. In those circumstances, the Company continues to capitalize the well or project costs pending the determination of proved status if (i) the well has found a sufficient quantity of reserves to justify its completion as a producing well and (ii) the Company is making sufficient progress assessing the reserves and the economic and operating viability of the project. The capitalized exploratory well costs are carried in unproved oil and natural gas properties. See Note 15 for the proved and unproved components of oil and natural gas properties. If the exploratory well is determined to be impaired, the well costs are charged to exploration and abandonments expense in the consolidated statements of operations.

The following table reflects the Company’s net capitalized exploratory well activity during the six months ended June 30, 2017:


		Six Months Ended
(in millions)		June 30, 2017

Beginning capitalized exploratory well costs		$	151
	Additions to exploratory well costs pending the determination of proved reserves		268
	Reclassifications due to determination of proved reserves		(126)
Ending capitalized exploratory well costs		$	293

The following table provides an aging at June 30, 2017 and December 31, 2016 of capitalized exploratory well costs based on the date drilling was completed:


			June 30,		December 31,
(dollars in millions)			2017		2016

Capitalized exploratory well costs that have been capitalized for a period of one year or less		$	288	$	141
Capitalized exploratory well costs that have been capitalized for a period greater than one year			5		10
	Total capitalized exploratory well costs	$	293	$	151
Number of projects with exploratory well costs that have been capitalized for a period greater
	than one year		6		8