Property, Plant and Equipment

3 Months Ended

Mar. 31, 2013

Property Plant And Equipment [Abstract]

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, 2013, the Company had total capitalized exploratory well costs pending the determination of proved reserves of $444.2 million. The following table reflects the net changes in capitalized exploratory well costs during the three-month periods ended March 31, 2013 and 2012.


(Thousands of dollars)	2013			2012
Beginning balance at January 1	$	445,697			556,412
Additions pending the determination of proved reserves		26,929			49,524
Reclassifications to proved properties based on the determination of proved reserves		(28,398	)		(42,431	)

Balance at March 31	$	444,228			563,505

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
	2013						2012
(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	$	56,324		6		3		109,907		29		5
One to two years		40,721		3		1		141,441		16		4
Two to three years		79,446		8		2		55,922		9		2
Three years or more		267,737		24		5		256,235		35		5

	$	444,228		41		11		563,505		89		16

Of the $387.9 million of exploratory well costs capitalized more than one year at March 31, 2013, $272.7 million is in Malaysia and $115.2 million is in the U.S. 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 2012, the Company announced that its Board of Directors had approved a plan to separate its U.S. retail marketing business into a separate publicly owned company. In 2010, the Company announced that its Board of Directors had approved plans to exit the U.K. refining and marketing business. These operations are presented as the U.S. and U.K. refining and marketing segments in Note P. The separation of the U.S. retail marketing business is expected to be completed during 2013. The sale process for the U.K. downstream assets continues in 2013. Based on current market conditions, it is possible that the Company could incur a loss when the U.K. downstream assets are sold. If the separation of the U.S. retail marketing business and the sale of the U.K. downstream assets continue to progress, the results of these operations are likely to be presented as discontinued operations in future periods when the operations no longer qualify as continuing operations under U.S. generally accepted accounting principles.

- 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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