7. Property, Plant, and Equipment

Property, plant, and equipment is stated at cost less accumulated depreciation/amortization and consisted of the following:

	Estimated Useful Life (Years)	March 31, 2013			December 31, 2012

		($ in thousands)
Oil and Gas Properties:
Unproved oil and gas properties		$	729,793		$	721,853
Less: accumulated valuation allowance			(80,773	)		(78,413	)

			649,020			643,440
Exploratory wells in process			475,750			451,024

Total oil and gas properties, net			1,124,770			1,094,464
Other Property and Equipment:
Computer equipment and software	3		3,202			3,166
Office equipment and furniture	3 - 5		2,128			2,093
Vehicles	3		268			268
Leasehold improvements	3 - 10		2,338			2,298

			7,936			7,825
Less: accumulated depreciation and amortization(1)			(2,992	)		(2,533	)

Total other property and equipment, net			4,944			5,292

Property, plant, and equipment, net		$	1,129,714		$	1,099,756

(1): During the year ended December 31, 2012, the Company wrote off $2.2 million of old computer equipment and leasehold improvements which were fully depreciated and which had no impact on the consolidated statements of operations and consolidated statements of cash flow.

The Company recorded $0.5 million, $0.2 million and $5.2 million of depreciation and amortization expense for the three months ended March 31, 2013 and 2012, and for the period November 10, 2005 (inception) through March 31, 2013, respectively.

Unproved Oil and Gas Properties

On December 20, 2011, the Company acquired a 40% working interest in Block 20 offshore Angola for a total consideration of $347.1 million, of which $337.1 million is contractually scheduled to be paid over five years commencing in January 2012. As of March 31, 2013, $165.7 million has been paid and the remaining $171.4 million was accrued in short-term and long-term contractual obligations. See Note 9—Contractual Obligations. In addition to the Block 20 interests, the Company has $10.8 million of unproved property acquisition costs relating to its 40% interests in Blocks 9 and 21 offshore Angola and its 21.25% working interest in the Diaba block offshore Gabon. As of March 31, 2013, the Company also has $291.1 million of unproved property acquisition costs, net of valuation allowance for impairment, relating to its U.S. Gulf of Mexico properties. This $291.1 million includes $8.0 million of acquisition costs incurred on various working interests in unproved properties located in the U.S. Gulf of Mexico acquired by the Company in 2013. As of March 31, 2013 and December 31, 2012, the Company has a net total of $649.0 million and $643.4 million, respectively, of unproved property acquisition costs on the condensed consolidated balance sheets.

On February 26, 2013, the Company executed a Purchase and Sale agreement (the "PSA") to sell its ownership interests on an unproved oil and gas property on Mississippi Canyon Block 209 for a total consideration of $5.6 million. The Company received $1.5 million at closing. Pursuant to the terms and conditions of the PSA, the Company will receive the remaining $4.1 million contingent upon the purchaser's commencement of operations and production on this property in the future. For the three months ended March 31, 2013, the Company recognized a gain of $1.5 million on the sale of assets as a result of this transaction.

Acquisition costs of unproved properties are assessed for impairment during the holding period and transferred to proved oil and gas properties to the extent associated with successful exploration activities. There are no impairment indicators to date that would require the Company to impair the unproved properties in Blocks 9, 20, and 21 offshore Angola and in the Diaba block offshore Gabon. Oil and gas leases for unproved properties in the U.S. Gulf of Mexico with carrying value greater than $1.0 million are assessed individually for impairment, based on the Company's current exploration plans, and an allowance for impairment is provided, if impairment is indicated. Leases that are individually less than $1.0 million in carrying value or are near expiration are amortized on a group basis over the average terms of the leases, at rates that provide for full amortization of leases upon lease expiration. These leases have expiration dates ranging from 2013 through 2022. As of March 31, 2013 and December 31, 2012, the balance for unproved properties that were subject to amortization before impairment provision was $69.0 million and $69.1 million, respectively. The Company recorded a lease impairment allowance of $2.4 million and $3.0 million for the three months ended March 31, 2013 and 2012, respectively, and $80.9 million for the period November 10, 2005 (inception) through March 31, 2013.

Capitalized Exploratory Well Costs

If an exploratory well provides evidence as to the existence of sufficient quantities of hydrocarbons to justify potential completion as a producing well, drilling costs associated with the well are initially capitalized, or suspended, pending a determination as to whether a commercially sufficient quantity of proved reserves can be attributed to the area as a result of drilling. This determination may take longer than one year in certain areas (generally, deepwater and international locations) depending upon, among other things, (i) the amount of hydrocarbons discovered, (ii) the outcome of planned geological and engineering studies, (iii) the need for additional appraisal drilling activities to determine whether the discovery is sufficient to support an economic development plan and (iv) the requirement for government sanctioning in international locations before proceeding with development activities.

The following tables reflect the Company's net changes in and the cumulative costs of capitalized exploratory well costs (excluding any related leasehold costs):

	March 31, 2013			December 31, 2012

	($ in thousands)
Beginning of period	$	451,024		$	178,338
Addition to capitalized exploratory well cost pending determination of proved reserves(1):
U.S. Gulf of Mexico:
Shenandoah #1 Exploratory Well		—			200
Shenandoah #2 Appraisal Well		—			12,716
Shenandoah #2 Replacement Well		13,586			18,271
Shenandoah Vertical Seismic Profile		2,282			—
Heidelberg #1 Exploratory Well		—			(419	)
Heidelberg #3 Appraisal Well		(948	)		8,628
Heidelberg #3 Appraisal Well Side Track		—			4,108
Heidelberg Early Development		7,148			5,941
Ligurian #2 Exploratory Well		—			46,961
North Platte #1 Exploratory Well		3,180			72,559
North Platte #1 By-Pass Core		13,625			7,229
North Platte Early Development		—			2,042
Aegean #1 Exploratory Well pre-spud costs		156			31
Ardennes #1 Exploratory Well		10,508			28
West Africa:
Bicuar #1 Exploratory Well pre-spud costs(2)		—			(3,035	)
Cameia #1 Exploratory Well		—			33,958
Cameia #2 Appraisal Well(3)		(34,215	)		133,328
Cameia #2 Drill Stem Test		65,752			—
Cameia Early Development		3,215			4,058
Mavinga #1 Exploratory Well pre-spud costs		5,317			—
Lontra #1 Exploratory Well pre-spud costs		872			—
Reclassifications to wells, facilities, and equipment based on determination of proved reserves		—			—
Amounts charged to expense(4)		(65,752	)		(73,918	)

End of period	$	475,750		$	451,024

(1): Additions to capitalized exploratory well costs include $1.7 million of capitalized interest costs during the three months ended March 31, 2013.
(2): The amount of $3.0 million represents pre-spud mobilization and insurance costs allocated to the Bicuar #1 pre-salt exploratory well planned as one of two exploratory wells initially scheduled to be drilled offshore Angola. With the success of the Cameia #1 exploratory well, the drilling of the Cameia #2 appraisal well was substituted for the Bicuar #1 pre-salt exploratory well. Hence these costs were reallocated to the Cameia #2 appraisal well.
(3): The amount of $34.2 million represents costs associated with the drill stem test that were allocated to the Cameia #2 appraisal well in 2012 and were reclassified to the Cameia #2 drill stem test during the three months ended March 31, 2013.
(4): The amount of $65.8 million for the three months ended March 31, 2013 represents impairment charges related to the lowest drilled interval evaluated by the Cameia #2 drill stem test, which failed to flow measurable hydrocarbons. The Company expects to write off an additional $10 to $15 million after March 31, 2013 related to the Cameia #2 drill stem test. The amount of $73.9 million for the year ended December 31, 2012 represents impairment charges on exploratory wells, including $4.1 million for the Heidelberg #3 sidetrack well, $8.1 million for the Ligurian #1 exploratory well, $49.0 million for the Ligurian #2 exploratory well and $12.7 million for the Shenandoah #2 appraisal well.

		March 31, 2013		December 31, 2012

		($ in thousands)
Cumulative costs:
U.S. Gulf of Mexico
Shenandoah #1 Exploratory Well	2008	$	69,668	$	69,668
Shenandoah #2 Replacement Well	2012		31,857		18,272
Shenandoah Vertical Seismic Profile	2013		2,282		—
Heidelberg #1 Exploratory Well	2008		19,821		19,822
Heidelberg #3 Appraisal Well	2011		11,736		12,683
Heidelberg Early Development	2012		13,090		5,941
North Platte #1 Exploratory Well	2012		75,738		72,559
North Platte #1 By-Pass Core	2012		20,854		7,229
North Platte Early Development	2012		2,042		2,042
Aegean #1 Exploratory Well pre-spud costs	2012		187		31
Ardennes #1 Exploratory Well	2012		10,537		28
West Africa:
Cameia #1 Exploratory Well	2011		105,363		105,363
Cameia #2 Appraisal Well	2012		99,188		133,328
Cameia Early Development	2012		7,198		4,058
Mavinga #1 Exploratory Well pre-spud costs	2012		5,317		—
Lontra #1 Exploratory Well pre-spud costs	2013		872		—

		$	475,750	$	451,024

Exploratory Well costs capitalized for a period greater than one year after completion of drilling (included in table above)		$	238,445	$	194,853

As of March 31, 2013, capitalized exploratory well costs that have been suspended longer than one year are associated with the Shenandoah #1, Heidelberg #1 and Cameia #1 discoveries. These exploratory well costs are suspended pending ongoing evaluation including, but not limited to, results of additional appraisal drilling, well-test analysis, additional geological and geophysical data and approval of a development plan. Management believes these discoveries exhibit sufficient indications of hydrocarbons to justify potential development and is actively pursuing efforts to fully assess them. If additional information becomes available that raises substantial doubt as to the economic or operational viability of these discoveries, the associated costs will be expensed at that time.

As of March 31, 2013, no exploratory wells have been drilled by the Company offshore Gabon.