Property, Plant and Equipment

6 Months Ended

Jun. 30, 2023

Property, Plant and Equipment [Abstract]

Note D – Property, Plant and Equipment

Exploratory Wells

Under Financial Accounting Standards Board 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.

As of June 30, 2023, the Company had total capitalized exploratory well costs for continuing operations pending the determination of proved reserves of $193.4 million. The following table reflects the net changes in capitalized exploratory well costs during the six-month periods ended June 30, 2023 and 2022.


(Thousands of dollars)	2023		2022
Beginning balance at January 1	$	171,860	$	179,481
Additions pending the determination of proved reserves	47,733		9,412

Capitalized exploratory well costs charged to expense	(26,188)		(10,472)
Balance at June 30	$	193,405	$	178,421

Capital additions of $47.7 million in 2023 are primarily related to Oso #1 well (Atwater Valley 138) and Longclaw GC 433 #1 in the Gulf of Mexico and LDV-4X in Vietnam. In the first quarter of 2023, drilling of the Oso #1 well was temporarily suspended prior to reaching the objective. The Company plans to return to the well in the third quarter of 2023. Capitalized well costs charged to dry hole expense of $26.2 million for the six months ended June 30, 2023 are related to Cholula -1 EXP well in Mexico and Chinook #7 exploration well in the Gulf of Mexico. The preceding table excludes well costs of $70.3 million incurred and expensed directly to dry hole during the six months ended June 30, 2023, related to the Chinook #7 exploration well in the Gulf of Mexico.

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,
	2023				2022

(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	$	8,494	1	1	$	4,268	2	2
One to two years	38,497		1	1	2,813		2	2
Two to three years	2,698		1	1	26,848		3	2
Three years or more	143,716		4	3	144,492		8	2
	$	193,405	7	6	$	178,421	15	8

Of the $184.9 million of exploratory well costs capitalized more than one year at June 30, 2023, $112.4 million was in Vietnam, $65.0 million was in the U.S., $4.8 million was in Canada, and $2.7 million was in Brunei. In all geographical areas, either further appraisal or development drilling is planned and/or development studies/plans are in various stages of completion.

Impairments

There were no impairments in the six months ended June 30, 2023 or 2022.

Divestitures

On July 31, 2023 the Company entered into a purchase and sale agreement to sell a portion of our operated non-core Kaybob Duvernay assets and all of our non-operated Placid Montney assets, located in Alberta, Canada for net cash consideration of C$150 million. The transaction is anticipated to close in the third quarter of 2023, subject to closing conditions and adjustments. No gain or loss is anticipated in relation to this transaction. These assets did not meet the accounting criteria to be disclosed as held for sale as of June 30, 2023 and continue to be classified as “Property, plant and equipment” on the Company’s Consolidated Balance Sheets.