Accounting For Suspended Exploratory Well Costs

12 Months Ended

Dec. 31, 2018

Accounting For Suspended Exploratory Well Costs [Abstract]

Accounting For Suspended Exploratory Well Costs

10. Accounting for Suspended Exploratory Well Costs

The Corporation continues capitalization of exploratory well costs when the well has found a sufficient quantity of reserves to justify its completion as a producing well and the Corporationis making sufficient progress assessing the reserves and the economic and operating viability of the project. The term “project” as used in this report can refer to a variety of different activities and does not necessarily have the same meaning as in any government payment transparency reports.

The following two tables provide details of the changes in the balance of suspended exploratory well costs as well as an aging summary of those costs.

Change in capitalized suspended exploratory well costs:

			2018	2017	2016
			(millions of dollars)
Balance beginning at January 1			3,700	4,477	4,372
	Additions pending the determination of proved reserves		564	906	180
	Charged to expense		(7)	(1,205)	(111)
	Reclassifications to wells, facilities and equipment based on the
		determination of proved reserves	(48)	(497)	-
	Divestments/Other		(49)	19	36
Ending balance at December 31			4,160	3,700	4,477
Ending balance attributed to equity companies included above			306	306	707

Period end capitalized suspended exploratory well costs:

			2018	2017	2016
			(millions of dollars)
Capitalized for a period of one year or less			564	906	180
	Capitalized for a period of between one and five years		2,028	1,345	2,981
	Capitalized for a period of between five and ten years		1,150	1,064	911
	Capitalized for a period of greater than ten years		418	385	405
Capitalized for a period greater than one year - subtotal			3,596	2,794	4,297
		Total	4,160	3,700	4,477

Exploration activity often involves drilling multiple wells, over a number of years, to fully evaluate a project. The table below provides a breakdown of the number of projects with only exploratory well costs capitalized for a period of one year or less and those that have had exploratory well costs capitalized for a period of greater than one year.

			2018	2017	2016
Number of projects that only have exploratory well costs capitalized for a period
	of one year or less		6	11	2
Number of projects that have exploratory well costs capitalized for a period
	of greater than one year		52	46	58
		Total	58	57	60

Of the 52 projects that have exploratory well costs capitalized for a period greater than one year as of December 31, 2018, 12projects have drilling in the preceding year or exploratory activity planned in the next two years, while the remaining 40 projects are those with completed exploratory activity progressing toward development.

The table below provides additional detail for those 40 projects, which total $2,543 million.

			Years Wells
		Dec. 31,	Drilled /
Country/Project		2018	Acquired	Comment
	(millions of dollars)
Angola
- AB32 Central NE Hub		69	2006 - 2014	Evaluating development plan for tieback to existing production facilities.
- Kaombo Split Hub		20	2005 - 2006	Evaluating development plan to tie into planned production facilities.
Phase 2
Argentina
- La Invernada		72	2014	Evaluating development plan to tie into planned infrastructure.
Australia
- East Pilchard		7	2001	Gas field near Kipper/Tuna development, awaiting capacity in existing/
				planned infrastructure.
- Gorgon Area Ullage		318	1994 - 2015	Evaluating development plans to tie into existing LNG facilities.
- SE Longtom		11	2010	Gas field near Tuna development, awaiting capacity in existing/planned
				infrastructure.
- SE Remora		33	2010	Gas field near Marlin development, awaiting capacity in existing/planned
				infrastructure.
Guyana
- Liza Phase 2		37	2017	Continuing development plan discussions with the government.
Iraq
- Kurdistan Pirmam		109	2015	Evaluating commercialization alternatives, while waiting for government
				approval to enter Gas Holding Period.
Kazakhstan
- Kairan		53	2004 - 2007	Evaluating commercialization and field development alternatives, while
				continuing discussions with the government regarding the development plan.
- Kalamkas		18	2006 - 2009	Evaluating/progressing development alternatives, while continuing
				discussions with the government regarding development plan.
Mozambique
- Rovuma LNG Future		120	2017	Evaluating/progressing development plan to tie into planned LNG facilities.
Non-Straddling Train
- Rovuma LNG Phase 1		150	2017	Progressing development plan to tie into planned LNG facilities.
- Rovuma LNG Unitized		35	2017	Evaluating/progressing development plan to tie into planned LNG facilities.
Trains
Nigeria
- Bolia		15	2002 - 2006	Evaluating development plan, while continuing discussions with the
				government regarding regional hub strategy.
- Bonga North		34	2004 - 2009	Evaluating/progressing development plan for tieback to existing/planned
				infrastructure.
- Bosi		79	2002 - 2006	Development activity under way, while continuing discussions with the
				government regarding development plan.
- Bosi Central		16	2006	Development activity under way, while continuing discussions with the
				government regarding development plan.
- Erha Northeast		26	2008	Evaluating development plan for tieback to existing production facilities.
- OML 138 Ukot SS		13	2015	Evaluating development plan for tieback to existing production facilities.
- OML 138 Ukot SW		41	2014	Evaluating development plan for tieback to existing production facilities.
- Pegi		32	2009	Awaiting capacity in existing/planned infrastructure.
- Satellite Field		12	2013	Evaluating development plan to tie into planned production facilities.
Development Phase 2
- Other (4 projects)		10	2001 - 2002	Evaluating and pursuing development of several additional discoveries.

			Years Wells
		Dec. 31,	Drilled /
Country/Project		2018	Acquired	Comment
	(millions of dollars)
Norway
- Gamma		13	2008 - 2009	Evaluating development plan for tieback to existing production facilities.
- Lavrans		15	1995 - 1999	Evaluating development plan, awaiting capacity in existing Kristin
				production facility.
- Other (6 projects)		23	2008 - 2014	Evaluating development plans, including potential for tieback to existing
				production facilities.
Papua New Guinea
- Juha		28	2007	Progressing development plans to tie into existing LNG facilities.
- Papua LNG		246	2017	Evaluating/progressing development plans.
Republic of Congo
- Mer Tres Profonde Sud		56	2000 - 2007	Evaluating development alternatives, while continuing discussions with the
				government regarding development plan.
Romania
- Neptun Deep		536	2012 - 2016	Continuing discussions with the government regarding development plan.
Vietnam
- Blue Whale		296	2011 - 2015	Evaluating/progressing development plans.
Total 2018 (40 projects)		2,543