Crude Oil and Natural Gas Property Information

The tables reflected below represent consolidated figures for the Company and its subsidiaries. In 2014, the Company initiated exploratory drilling activities in Canada. Through December 31, 2018, those drilling activities have not had a material impact on the Company’s total capital expenditures, production, and revenues. Accordingly, the results of operations, costs incurred, and capitalized costs associated with the Canadian operations have not been shown separately from the consolidated figures in the tables below. Additionally, results attributable to noncontrolling interests are immaterial and are not separately presented below.

The following table sets forth the Company’s consolidated results of operations from crude oil and natural gas producing activities for the years ended December 31, 2018, 2017 and 2016.



	Year ended December 31,
In thousands	2018			2017			2016
Crude oil and natural gas sales (1)	$	4,678,722		$	2,982,966		$	2,026,958
Production expenses	(390,423		)	(324,214		)	(289,289		)
Production taxes	(353,140		)	(208,278		)	(142,388		)
Transportation expenses (1)	(191,587		)	—			—
Exploration expenses	(7,642		)	(12,393		)	(16,972		)
Depreciation, depletion, amortization and accretion	(1,839,241		)	(1,652,180		)	(1,679,485		)
Property impairments	(125,210		)	(237,370		)	(237,292		)
Income tax (provision) benefit (2)	(434,047		)	504,475			126,794
Results from crude oil and natural gas producing activities	$	1,337,432		$	1,053,006		$	(211,674	)


(1)	For 2018, crude oil and natural gas sales are presented gross of certain transportation expenses as a result of the Company's January 1, 2018 adoption of new revenue recognition and presentation rules as discussed in Note 8. Revenues. The new rules were prospectively applied beginning January 1, 2018 and prior period results have not been adjusted to conform to the current presentation.

(2)

Income taxes reflect the application of a combined federal and state tax rate of 24.5% for 2018 and 38% for both 2017 and 2016 on pre-tax income and losses generated by operations in the United States. Additionally, the 2017 period includes a $713.7 million income tax benefit recognized upon the Company’s remeasurement of its deferred income tax assets and liabilities in response to the enactment of the Tax Cuts and Jobs Act in December 2017. See Note 9. Income Taxes for further discussion.

Costs incurred in crude oil and natural gas activities

Costs incurred, both capitalized and expensed, in connection with the Company’s consolidated crude oil and natural gas acquisition, exploration and development activities for the years ended December 31, 2018, 2017 and 2016 are presented below:



	Year ended December 31,
In thousands	2018		2017		2016
Property acquisition costs:
Proved	$	31,579	$	8,446	$	5,008
Unproved	329,586		220,875		149,962
Total property acquisition costs	361,165		229,321		154,970
Exploration Costs	81,015		123,461		182,355
Development Costs	2,478,327		1,695,954		767,148
Total	$	2,920,507	$	2,048,736	$	1,104,473

Costs incurred above include asset retirement costs and revisions thereto of $25.8 million, $15.3 million and ($9.6) million for the years ended December 31, 2018, 2017 and 2016, respectively.

Aggregate capitalized costs

Aggregate capitalized costs relating to the Company’s consolidated crude oil and natural gas producing activities and related accumulated depreciation, depletion and amortization as of December 31, 2018 and 2017 are as follows:



	December 31,
In thousands	2018			2017
Proved crude oil and natural gas properties	$	24,060,625		$	21,362,199
Unproved crude oil and natural gas properties	291,564			365,413
Total	24,352,189			21,727,612
Less accumulated depreciation, depletion and amortization	(10,680,870		)	(8,971,935		)
Net capitalized costs	$	13,671,319		$	12,755,677

Under the successful efforts method of accounting, the costs of drilling an exploratory well are capitalized pending determination of whether proved reserves can be attributed to the discovery. When initial drilling and completion operations are complete, management attempts to determine whether the well has discovered crude oil and natural gas reserves and, if so, whether those reserves can be classified as proved reserves. Often, the determination of whether proved reserves can be recorded under SEC guidelines cannot be made when drilling is completed. In those situations where management believes that economically producible hydrocarbons have not been discovered, the exploratory drilling costs are reflected on the consolidated statements of comprehensive income (loss) as dry hole costs, a component of “Exploration expenses”. Where sufficient hydrocarbons have been discovered to justify further exploration or appraisal activities, exploratory drilling costs are deferred under the caption “Net property and equipment” on the consolidated balance sheets pending the outcome of those activities.

On at least a quarterly basis, operating and financial management review the status of all deferred exploratory drilling costs in light of ongoing exploration activities—in particular, whether the Company is making sufficient progress in its ongoing exploration and appraisal efforts. If management determines that future appraisal drilling or development activities are not likely to occur, any associated exploratory well costs are expensed in that period of determination.

The following table presents the amount of capitalized exploratory well costs pending evaluation at December 31 for each of the last three years and changes in those amounts during the years then ended:



	Year ended December 31,
In thousands	2018			2017			2016
Balance at January 1	$	31,356		$	34,852		$	59,397
Additions to capitalized exploratory well costs pending determination of proved reserves	45,088			79,451			123,980
Reclassification to proved crude oil and natural gas properties based on the determination of proved reserves	(72,347		)	(81,035		)	(141,941		)
Capitalized exploratory well costs charged to expense	(138		)	(1,912		)	(6,584		)
Balance at December 31	$	3,959		$	31,356		$	34,852
Number of gross wells	16			37			54

As of December 31, 2018, the Company had no significant exploratory well costs that were suspended one year beyond the completion of drilling.