Note E – Property, Plant and Equipment



	December 31, 2014				December 31, 2013
(Thousands of dollars)	Cost		Net		Cost	Net
Exploration and production1	$	22,731,220	13,277,985	2	21,932,119	13,433,468	2
Corporate and other		103,351	53,062		89,175	47,587
	$	22,834,571	13,331,047		22,021,294	13,481,055
1 Includes mineral rights as follows:	$	924,253	410,482		1,007,920	489,578
2 Includes $58,334 in 2014 and $48,691 in 2013 related to administrative assets and support equipment.

In December 2014, the Company sold 20% of its oil and gas assets in Malaysia and received net cash proceeds of $1,460,425,000. The Company recorded an after-tax gain on this sale of $321,454,000 in 2014.

Under FASB guidance exploratory well costs should continue to be capitalized when the well has found a sufficient quantity of reserves to justify its completion as a producing well and the company is making sufficient progress assessing the reserves and the economic and operating viability of the project.

At December 31, 2014, 2013 and 2012, the Company had total capitalized drilling costs pending the determination of proved reserves of $120,455,000, $393,030,000 and $445,697,000, respectively. The following table reflects the net changes in capitalized exploratory well costs during the three-year period ended December 31, 2014.



(Thousands of dollars)		2014	2013	2012
Beginning balance at January 1	$	393,030	445,697	556,412
Additions to capitalized exploratory well costs pending the determination of proved reserves		2,874	57,716	135,849
Reclassifications to proved properties based on the determination of proved reserves		(91,236)	(93,936)	(165,377)
Reduction of capitalized exploratory well costs due to partial asset sale in Malaysia		(122,175)	–	–
Capitalized exploratory well costs charged to expense		(62,038)	(16,447)	(81,187)
Ending balance at December 31	$	120,455	393,030	445,697

The following table provides an aging of capitalized exploratory well costs based on the date the drilling was completed and the number of projects for which exploratory well costs has been capitalized since the completion of drilling.



	2014				2013				2012
(Thousands of dollars)	Amount		No. of Wells	No. of Projects	Amount		No. of Wells	No. of Projects	Amount		No. of Wells	No. of Projects
Aging of capitalized well costs:
Zero to one year	$	–	–	–	$	56,499	3	1	$	59,833	7	2
One to two years		59,330	3	1		60,787	7	1		18,335	2	3
Two to three years		6,606	3	–		–	–	–		83,314	9	4
Three years or more		54,519	2	2		275,744	22	7		284,215	26	6
	$	120,455	8	3	$	393,030	32	9	$	445,697	44	15

Of the $120,455,000 of exploratory well costs capitalized more than one year at December 31, 2014, $54,519,000 is in the U.S. and $65,936,000 is in Brunei. In the U.S. further drilling is anticipated and development plans are being formulated. In Brunei development options are under review for these multiple gas discoveries. The capitalized well costs charged to expense in 2014 included four gas wells in Peninsula Malaysia and one well in the Gulf of Mexico. The Company’s application to extend the gas holding period for the Malaysia wells was denied by the Malaysian government in 2014. Development of the well in the Gulf of Mexico could not be justified due to the low prices for natural gas at year-end 2014. The capitalized well costs charged to expense in 2013 included two wells offshore Sarawak Malaysia that were written off due to the Company’s decision not to move forward with development of the wells. The capitalized well costs charged to expense in 2012 included a suspended well in the northern block of the Republic of the Congo that was written off following unsuccessful wildcat drilling in 2012 at a nearby prospect, two suspended wells offshore Sarawak Malaysia that were written off following a decision not to continue development of the wells, and a well drilled in the Gulf of Mexico in 2010 that the owners decided not to develop.

At year-end 2014, the Company recorded an impairment writedown of property, plant and equipment in the amount of $14,267,000 related to one gas well in the Gulf of Mexico, and in 2013 an impairment writedown of $21,587,000 was recorded for properties in Western Canada. At year-end 2012, Murphy determined that the Azurite field, offshore Republic of the Congo, was impaired due to removal of all proved oil reserves after an unsuccessful redrill of a key well in the field. The impairment charge in 2012 totaled $200,000,000 and included a write-off of the remaining book value of the Azurite field plus other anticipated losses related to operations of the field. Fair value was determined at these fields using a discounted cash flow model based on certain key assumptions, including future estimated net production levels, future estimated oil prices for the field based on year-end futures prices, and future estimated operating and capital expenditures.