Property, Plant and Equipment

3 Months Ended

Mar. 31, 2016

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 March 31, 2016, the Company had total capitalized exploratory well costs pending the determination of proved reserves of $129.6 million.  The following table reflects the net changes in capitalized exploratory well costs during the

three-month periods ended March 31, 2016 and 2015.

(Thousands of dollars)	2016		2015
Beginning balance at January 1	$	130,514	120,455
Additions pending the determination of proved reserves		–	141
Other adjustments		(886)	–
Balance at March 31	$	129,628	120,596

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

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.

		March 31,
	2016				2015
(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	$	65,136	7	6	$	–	–	–
One to two years		–	–	–		32,192	2	1
Two to three years		31,627	2	–		33,744	4	2
Three years or more		32,865	4	–		54,660	2	–
	$	129,628	13	6	$	120,596	8	3

Exploratory well costs capitalized more than one year at March 31, 2016 are in Brunei.  Development options are under review for these multiple gas discoveries in Brunei.

During the first quarter of 2016, declines in crude oil and natural gas prices from year end 2015 provided indications of possible impairments in certain of the company’s producing properties.  As a result of management’s assessments, the Company recognized pretax non-cash impairments charges of $95.1 million to reduce the carrying value of its Terra Nova field offshore Canada and for Western Canada onshore heavy oil producing properties to their estimated fair value.  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 region.

During the first quarter 2015, the Company completed the sale of 10% of its oil and gas assets in Malaysia and received net cash proceeds of $417.2 million.  The Company recorded an after-tax gain of $199.5 million on the sale in the first quarter of 2015.