Property, Plant and Equipment

9 Months Ended

Sep. 30, 2012

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 September 30, 2012, the Company had total capitalized exploratory well costs pending the determination of proved reserves of $571.8 million. The following table reflects the net changes in capitalized exploratory well costs during the nine-month periods ended September 30, 2012 and 2011.


(Thousands of dollars)	2012			2011
Beginning balance at January 1	$	556,412			497,765
Additions pending the determination of proved reserves		143,863			31,481
Reclassifications to proved properties based on the determination of proved reserves		(76,633	)		0
Capitalized exploratory well costs charged to expense		(51,866	)		0

Balance at September 30	$	571,776			529,246

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.


	September 30,
	2012						2011
(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	$	82,521		8		5	$	92,752		15		5
One to two years		90,390		7		3		69,591		9		1
Two to three years		114,532		6		1		115,924		8		3
Three years or more		284,333		26		6		250,979		37		7

	$	571,776		47		15	$	529,246		69		16

Of the $489.3 million of exploratory well costs capitalized more than one year at September 30, 2012, $270.5 million is in Malaysia, $189.5 million is in the U.S. and $29.3 million is in Republic of the Congo. In Malaysia either further appraisal or development drilling is planned and/or development studies/plans are in various stages of completion. In the U.S. drilling and development operations are planned. In Republic of the Congo further appraisal drilling is planned.

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

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