EXPLORATORY COSTS

The Company capitalizes exploratory drilling costs until a determination is made that the well or project has either found proved reserves or is impaired. After an exploratory well has been drilled and found oil and natural gas reserves, a determination may be pending as to whether the oil and natural gas quantities can be classified as proved. In those circumstances, the Company continues to capitalize the drilling costs pending the determination of proved status if (i) the well has found a sufficient quantity of reserves to justify its completion as a producing well and (ii) the Company is making sufficient progress assessing the reserves and the economic and operating viability of the project. Capitalized exploratory drilling costs are presented in oil and gas properties in the balance sheets. If the exploratory well is determined to be impaired, the impaired costs are charged to operations and maintenance expense. Other exploration costs, including geological and geophysical costs, are expensed as incurred.

The following table sets forth capitalized exploratory well costs and includes additions pending determination of proved reserves, reclassifications to proved reserves and costs charged to expense:



	Three months ended			Three months ended
(in thousands)	March 31, 2014			March 31, 2013
Capitalized exploratory well costs at beginning of period	$	57,600		$	79,791
Additions pending determination of proved reserves	164,842			95,861
Reclassifications due to determination of proved reserves	(112,474		)	(69,477		)
Capitalized exploratory well costs at end of period	$	109,968		$	106,175

The following table sets forth capitalized exploratory wells costs and includes amounts capitalized for a period greater than one year:



	Three months ended		Three months ended
(in thousands)	March 31, 2014		March 31, 2013
Exploratory wells in progress	$	62,280	$	21,676
Capitalized exploratory well costs capitalized for a period of one year or less	46,460		83,301
Capitalized exploratory well costs for a period greater than one year	1,228		1,198
Total capitalized exploratory well costs	$	109,968	$	106,175

At March 31, 2014, the Company had 45 gross exploratory wells either drilling or waiting on results from completion and testing. These wells are primarily located in the Permian Basin. The Company has one gross well capitalized greater than a year which is pending results from completion and testing. This well is currently waiting on facilities.