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Accounting For Suspended Exploratory Well Costs
 12 Months Ended
Dec. 31, 2012
Accounting For Suspended Exploratory Well Costs [Abstract]  
Accounting For Suspended Exploratory Well Costs

10. Accounting for Suspended Exploratory Well Costs

The Corporation continues capitalization of exploratory well costs when the well has found a sufficient quantity of reserves to justify its completion as a producing well and the Corporation is making sufficient progress assessing the reserves and the economic and operating viability of the project. The term “project” as used in this report does not necessarily have the same meaning as under SEC Rule 13q-1 relating to government payment reporting. For example, a single project for purposes of the rule may encompass numerous properties, agreements, investments, developments, phases, work efforts, activities, and components, each of which we may also informally describe as a “project.”

The following two tables provide details of the changes in the balance of suspended exploratory well costs as well as an aging summary of those costs.

Change in capitalized suspended exploratory well costs:

 

    2012 2011 2010
    (millions of dollars)
         
Balance beginning at January 1 2,881 2,893 2,005
 Additions pending the determination of proved reserves 868 310 1,103
 Charged to expense (95) (213) (104)
 Reclassifications to wells, facilities and equipment based on the      
  determination of proved reserves (631) (149) (136)
 Divestments/Other (344) 40 25
Ending balance at December 31 2,679 2,881 2,893
Ending balance attributed to equity companies included above 3  -  -

Period end capitalized suspended exploratory well costs:

    2012 2011 2010
    (millions of dollars)
         
Capitalized for a period of one year or less 866 310 1,103
 Capitalized for a period of between one and five years 1,176 1,922 1,294
 Capitalized for a period of between five and ten years 401 409 278
 Capitalized for a period of greater than ten years 236 240 218
Capitalized for a period greater than one year - subtotal 1,813 2,571 1,790
  Total 2,679 2,881 2,893

Exploration activity often involves drilling multiple wells, over a number of years, to fully evaluate a project. The table below provides a numerical breakdown of the number of projects with suspended exploratory well costs which had their first capitalized well drilled in the preceding 12 months and those that have had exploratory well costs capitalized for a period greater than 12 months.

    2012 2011 2010
Number of projects with first capitalized well drilled in the preceding 12 months10 4 9
Number of projects that have exploratory well costs capitalized for a period     
 of greater than 12 months 45 58 59
  Total 55 62 68

Of the 45 projects that have exploratory well costs capitalized for a period greater than 12 months as of December 31, 2012, 17 projects have drilling in the preceding 12 months or exploratory activity planned in the next two years, while the remaining 28 projects are those with completed exploratory activity progressing toward development. The table below provides additional detail for those 28 projects, which total $557 million.

   Years 
  Dec. 31,Wells 
Country/Project2012DrilledComment
 (millions of dollars) 
Angola     
- Perpetua-Zina-Acacia 15 2008 - 2009 Oil field near Pazflor development, awaiting capacity in existing/planned
      infrastructure.
Australia     
- East Pilchard 10 2001 Gas field near Kipper/Tuna development, awaiting capacity in existing/planned
      infrastructure.
- SE Longtom 16 2010 Gas field near Tuna development, awaiting capacity in existing/planned infrastructure.
Indonesia     
- Natuna 118 1981 - 1983 Development activity under way, while continuing discussions with the government
      on contract terms pursuant to executed Heads of Agreement.
Kazakhstan     
- Kairan 53 2004 - 2007 Evaluating commercialization and field development alternatives, while continuing
      discussions with the government regarding the development plan.
Malaysia     
- Besar 18 1992 - 2010 Gas field off the east coast of Malaysia; progressing development plan.
- Bindu 2 1995 Awaiting capacity in existing/planned infrastructure.
Nigeria     
- Bolia 15 2002 - 2006 Evaluating development plan, while continuing discussions with the government
      regarding regional hub strategy.
- Bosi 79 2002 - 2006 Development activity under way, while continuing discussions with the government
      regarding development plan.
- Bosi Central 16 2006 Development activity under way, while continuing discussions with the government
      regarding development plan.
- Pegi 32 2009 Awaiting capacity in existing/planned infrastructure.
- Usan South Strip 16 2011 Evaluating development plans to tie into planned infrastructure.
- Other (5 projects) 16 2001 - 2002 Evaluating and pursuing development of several additional discoveries.
Norway     
- Gamma 21 2008 - 2009 Evaluating development plan for tieback to existing production facilities.
- H-North 16 2007 Progressing development and commercialization plans.
- Lavrans 24 1995 - 1999 Development awaiting capacity in existing Kristin production facility; evaluating
      development concepts for phased ullage scenarios.
- Other (5 projects) 23 2008 - 2010 Evaluating development plans, including potential for tieback to existing production
      facilities.
Papua New Guinea     
- Juha 28 2007 Working on development plans to tie into planned LNG facilities.
United Kingdom     
- Phyllis 8 2004 Evaluating development plan for tieback to existing production facilities.
United States     
- Tip Top 31 2009 Evaluating development concept and requisite facility upgrades.
Total 2012 (28 projects) 557