Note E – Property, Plant and Equipment



	December 31, 2015				December 31, 2014
(Thousands of dollars)	Cost		Net		Cost	Net
Exploration and production1	$	21,607,962	9,723,222	2	22,731,220	13,277,985	2
Corporate and other		134,596	95,143		103,351	53,062
	$	21,742,558	9,818,365		22,834,571	13,331,047
1 Includes mineral rights as follows:	$	1,075,040	612,518		924,253	410,482

2. Includes $50,924 in 2015 and $58,334 in 2014

related to administrative assets and support equipment.

In late 2014 and early 2015, the Company sold a total of 30% of its oil and gas assets in Malaysia. In January 2015, the Company sold 10% of its assets and received net cash proceeds of $417,200,000. The Company recorded an after-tax gain of $218,800,000 in 2015 on the sale of the 10%. 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, 2015, 2014 and 2013, the Company had total capitalized drilling costs pending the determination of proved reserves of $130,514,000, $120,455,000 and $393,030,000, respectively. The following table reflects the net changes in capitalized exploratory well costs during the three-year period ended December 31, 2015.



(Thousands of dollars)	2015		2014	2013
Beginning balance at January 1	$	120,455	393,030	445,697
Additions to capitalized exploratory well costs pending the determination of proved reserves		64,578	2,874	57,716
Reclassifications to proved properties based on the determination of proved reserves		–	(91,236)	(93,936)
Reduction of capitalized exploratory well costs due to partial asset sale in Malaysia		–	(122,175)	–
Capitalized exploratory well costs charged to expense		(54,519)	(62,038)	(16,447)
Ending balance at December 31	$	130,514	120,455	393,030

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 has been capitalized. The projects are aged based on the last well drilled in the project.



	2015				2014				2013
(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	$	66,032	7	6	$	–	–	–	$	56,499	3	1
One to two years		–	–	–		59,330	3	1		60,787	7	1
Two to three years		57,876	3	–		6,606	3	–		–	–	–
Three years or more		6,606	3	–		54,519	2	2		275,744	22	7
	$	130,514	13	6	$	120,455	8	3	$	393,030	32	9

Exploratory well costs capitalized more than one year at December 31, 2015 are in Brunei. In Brunei, development options are under review for these multiple gas discoveries. The capitalized well costs charged to expense in 2015 included one well in the Gulf of Mexico in which development of the well could not be justified due to uncommercial hydrocarbon quantities found in the sidetrack and one project in the Gulf of Mexico deemed unlikely to be developed due to distressed commodity prices. 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.

During the second half of 2015, declines in future oil and gas prices provided indications of possible impairments in certain of the Company’s producing properties. As a result of management’s assessments, the Company recognized pretax noncash impairment charges of $2,493,156,000 to reduce the carrying value of certain offshore producing and non-producing properties in the Gulf of Mexico, producing offshore properties in Malaysia and for Western Canada onshore heavy oil producing properties to their estimated fair value. At year-end 2014, the Company recorded an impairment writedown 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. The fair values were determined by internal discounted cash flow models using estimates of future production, prices from futures exchanges, costs, and a discount rate believed to be consistent with those used by principal market participants in the applicable region. The following table reflects the recognized impairments for the three years ended December 31, 2015.



	December 31,
(Thousands of dollars)		2015	2014		2013
Gulf of Mexico	$	328,982	14,267		–
Western Canada – Heavy Oil		683,574	37,047	*	21,587
Malaysia		1,480,600	–		–
	$	2,493,156	51,314		21,587

* This amount represented the writeoff of goodwill associated with an oil and gas company acquired in 2000.