EXPLORATORY COSTS

Energen capitalizes exploratory drilling costs until a determination is made that the well or project has either found proved reserves or is impaired. After an exploratory well has been drilled and found oil and natural gas reserves, a determination may be pending as to whether the oil and natural gas quantities can be classified as proved. In those circumstances, Energen continues to capitalize the drilling 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) Energen is making sufficient progress assessing the reserves and the economic and operating viability of the project. Capitalized exploratory drilling costs are presented in proved properties in the balance sheets. If the exploratory well is determined to be a dry hole, the costs are charged to exploration expense. Other exploration costs, including geological and geophysical costs, are expensed as incurred.

The following table sets forth capitalized exploratory well costs and includes additions pending determination of proved reserves, reclassifications to proved reserves and costs charged to expense:



	Three months ended June 30,
(in thousands)	2017			2016
Capitalized exploratory well costs at beginning of period	$	168,265		$	105,591
Additions pending determination of proved reserves	170,737			78,457
Reclassifications due to determination of proved reserves	(197,601		)	(146,610		)
Capitalized exploratory well costs at end of period	$	141,401		$	37,438



	Six months ended June 30,
(in thousands)	2017			2016
Capitalized exploratory well costs at beginning of period	$	164,996		$	103,588
Additions pending determination of proved reserves	335,703			161,903
Reclassifications due to determination of proved reserves	(359,298		)	(228,053		)
Capitalized exploratory well costs at end of period	$	141,401		$	37,438

The following table sets forth capitalized exploratory well costs:



(in thousands)	June 30, 2017		December 31, 2016
Exploratory wells in progress (drilling rig not released)	$	15,224	$	14,531
Capitalized exploratory well costs capitalized for a period of one year or less	126,177		143,602
Capitalized exploratory well costs for a period greater than one year	—		6,863
Total capitalized exploratory well costs	$	141,401	$	164,996

At June 30, 2017, Energen had 51 gross exploratory wells either drilling or waiting on results from completion and testing, all of which were located in the Permian Basin. As of June 30, 2017, the Company had no wells capitalized greater than a year. As of December 31, 2016, the Company had two gross wells capitalized greater than a year, which were completed during 2017.