Property, Plant and Equipment

6 Months Ended

Jun. 30, 2015

Property, Plant And Equipment [Abstract]

Property, Plant and Equipment

Note B – Property, Plant and Equipment

Under U.S. generally accepted accounting principles for companies that use the successful efforts method of accounting, 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 June 30, 2015, the Company had total capitalized exploratory well costs pending the determination of proved reserves of $122.1 million.  The following table reflects the net changes in capitalized exploratory well costs during the six-month periods ended June 30, 2015 and 2014.

(Thousands of dollars)	2015		2014
Beginning balance at January 1	$	120,455	393,030
Additions pending the determination of proved reserves		1,620	3,376
Reclassifications to proved properties based on the determination of proved reserves		–	–
Capitalized exploratory well costs charged to expense		–	–
Balance at June 30	$	122,075	396,406

The following table provides an aging of capitalized exploratory well costs based on the date the drilling was completed for each individual well and the number of projects for which exploratory well costs have been capitalized.  The projects are aged based on the last well drilled in the project.

		June 30,
	2015				2014
(Thousands of dollars)	Amount		No. of Wells	No. of Projects	Amount		No. of Wells	No. of Projects
Aging of capitalized well costs:
Zero to one year	$	217	2	1	$	32,192	2	1
One to two years		32,192	2	1		50,333	3	1
Two to three years		27,842	2	–		37,969	5	–
Three years or more		61,824	4	2		275,912	22	7
	$	122,075	10	4	$	396,406	32	9

Note B – Property, Plant and Equipment (Contd.)

Of the $121.9 million of exploratory well costs capitalized more than one year at June 30, 2015, $55.9 million is in the U.S. and $66.0 million is in Brunei.  In both geographical areas, either further appraisal or development drilling is planned and/or development studies/plans are in various stages of completion.

During the first quarter 2015, the Company completed the second phase of the sale of 30% of its oil and gas assets in Malaysia and received net cash proceeds of $417.2 million.  The Company recorded an after-tax gain on this sale of $199.5 million.  Combined net cash proceeds received to date from the 30% sale, subject to final adjustments, totaled $1.88 billion.

See also Note E for discussion regarding a capital lease of production equipment at the Kakap field.