Impairment and Ceiling Test Charges

12 Months Ended

Dec. 31, 2013

Impairment and Ceiling Test Charges

Impairment and Ceiling Test Charges

3.  Impairment and Ceiling Test Charges

During 2013, we recorded a $2 million impairment on certain materials and supplies to reflect a market value lower than underlying cost of those items. Under the full cost method of accounting, the predecessor recorded a non-cash charge of approximately $62 million in the period from January 1 to May 24, 2012,  as a result of the decision to exit exploration and development activities in Egypt.   The charge related to unevaluated costs in that country and included approximately $2 million related to equipment.  For the predecessor period ended December 31, 2011, we recorded an impairment of certain oil field related materials and supplies of $6 million to reflect a market value lower than underlying cost of those items.

Forward commodity prices can play a significant role in determining future impairments. Due to the current forecast of future oil, natural gas and NGLs prices and considering the significant amount of fair value allocated to our natural gas and oil properties in conjunction with the Acquisition, sustained lower oil and natural gas prices from present levels could result in an impairment of the carrying value of our proved properties in the future.