Asset Retirement Obligations

12 Months Ended

Dec. 31, 2011

Asset Retirement Obligations

Note H – Asset Retirement Obligations

The majority of the asset retirement obligations liabilities (ARO) recognized by the Company at December 31, 2011 and 2010 related to the estimated costs to dismantle and abandon its producing oil and gas properties and related equipment. A portion of the ARO related to retail gasoline stations. The Company has not recorded an ARO for its refining, ethanol and certain of its marketing assets because sufficient information is presently not available to estimate a range of potential settlement dates for the obligation. These assets are consistently being upgraded and are expected to be operational into the foreseeable future. In these cases, the obligation will be initially recognized in the period in which sufficient information exists to estimate the liability.

A reconciliation of the beginning and ending aggregate carrying amount of the asset retirement obligation for 2011 and 2010 is shown in the following table.

(Thousands of dollars)	2011			2010
Balance at beginning of year	$	555,248			476,938
Accretion expense		37,701			31,857
Liabilities incurred		51,858			59,605
Revision of previous estimates		7,608			14,170
Liabilities settled		(32,088	)*		(36,506	)
Changes due to translation of foreign currencies		(4,782	)		9,184
Balance at end of year	$	615,545			555,248

* Includes noncash settlements related to sale of assets in Spain in 2011.

The estimation of future ARO is based on a number of assumptions requiring professional judgment. The Company cannot predict the type of revisions to these assumptions that may be required in future periods due to the availability of additional information such as: prices for oil field services, technological changes, governmental requirements and other factors.