Property, Plant and Equipment

3 Months Ended

Mar. 31, 2024

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Note D – Property, Plant and Equipment

Exploratory Wells

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.

As of March 31, 2024, the Company had total capitalized drilling costs pending the determination of proved reserves of $34.2 million. The following table reflects the net changes in capitalized exploratory well costs during the three-month periods ended March 31, 2024 and 2023.

(Thousands of dollars)	2024		2023
Beginning balance at January 1	$	49,118	$	171,860
Additions pending the determination of proved reserves	11,538		24,685
Capitalized exploratory well costs charged to expense	(26,471)		–
Balance at March 31	$	34,185	$	196,545

Capitalized well costs charged to dry hole expense of $26.5 million for the three months ended March 31, 2024 was related to the Hoffe Park #1 (Mississippi Canyon 166) exploratory well in the Gulf of Mexico. Capital additions include the Orange #1 (Mississippi Canyon 216) and Ocotillo #1 (Mississippi Canyon 40) exploratory wells in the Gulf of Mexico. The preceding table excludes well costs of $5.9 million incurred and expensed directly to dry hole during the three months ended March 31, 2024, mainly related to the Oso #1 (Atwater Valley 138) 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.

	March 31,
	2024				2023
(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	$	11,641	4	3	$	40,236	2	2
One to two years	–		–	–	13,171		2	2
Two to three years	–		–	–	–		–	–
Three years or more	22,544		3	3	143,138		5	4
	$	34,185	7	6	$	196,545	9	8

Of the $22.5 million of exploratory well costs capitalized more than one year at March 31, 2024, $15.1 million was in Vietnam, $4.7 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 pre-tax impairments of $34.5 million in the three months ended March 31, 2024 related to Calliope field in the Mississippi Canyon block in the Gulf of Mexico in which operational issues led to a reserve reduction. There were no impairments in the three months ended March 31, 2023.

Divestitures

On September 15, 2023, the Company completed the divestment of certain non-core operated Kaybob Duvernay assets and all of our non-operated Placid Montney assets, located in Alberta, Canada for net cash proceeds of C$139.0 million. No gain or loss was recorded related to this transaction, and the effective date of the transaction was March 1, 2023.