5. Property, Plant and Equipment

General. As of March 31, 2014 and December 31, 2013, we had $1.2 billion and $1.4 billion of unproved oil and natural gas properties on our balance sheet. During the first quarter of 2014, we transferred approximately $0.2 billion from unproved properties to proved properties. For the quarters ended March 31, 2014 and 2013, we recorded $7 million and $12 million of amortization of unproved leasehold costs in exploration expense in our income statement. Suspended well costs were not material as of March 31, 2014 or December 31, 2013. For a discussion of our impairment assessment of oil and natural gas properties see Note 3 to our Annual Report on Form 10-K.

Asset Retirement Obligations. We have legal asset retirement obligations associated with the retirement of our oil and natural gas wells and related infrastructure. We incur these obligations when production on those wells is exhausted, when we no longer plan to use them or when we abandon them. We accrue these obligations when we can estimate the timing and amount of their settlement. In estimating the liability associated with our asset retirement obligations, we utilize several assumptions, including a credit-adjusted risk-free rate of 7 percent and a projected inflation rate of 2.5 percent. The net asset retirement liability as of March 31, 2014 on our consolidated balance sheet in other current and non-current liabilities and the changes in that net liability from January 1 through March 31, 2014 were as follows:

	2014
	(in millions)
Net asset retirement liability at January 1	$	53
Liabilities settled	(1		)
Property sale	(1		)
Accretion expense	1
Liabilities incurred	1
Net asset retirement liability at March 31(1)	$	53

(1) Amount does not include $37 million as of March 31, 2014 of net asset retirement liability associated with our Brazil operations classified as discontinued operations.

Capitalized Interest. Interest expense is reflected in our financial statements net of capitalized interest. Capitalized interest for each of the quarters ended March 31, 2014 and 2013 was approximately $5 million.