Property, Plant and Equipment

9 Months Ended

Sep. 30, 2014

Property, Plant And Equipment [Abstract]

Property, Plant and Equipment

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, 2014, the Company had total capitalized exploratory well costs pending the determination of proved reserves of $406.6 million.  The following table reflects the net changes in capitalized exploratory well costs during the nine-month periods ended September  30, 2014 and 2013.

(Thousands of dollars)	2014		2013
Beginning balance at January 1	$	393,030	445,697
Additions pending the determination of proved reserves		13,595	28,168
Reclassifications to proved properties based on the determination of proved   reserves		–	(52,865)
Balance at September 30	$	406,625	421,000

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,
	2014				2013
(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	$	32,192	2	1	$	36,424	2	2
One to two years		36,676	2	1		51,444	6	–
Two to three years		51,898	6	–		35,504	3	3
Three years or more		285,859	22	7		297,628	27	5
	$	406,625	32	9	$	421,000	38	10

Note B – Property, Plant and Equipment(Contd.)

Of the $374.4 million of exploratory well costs capitalized more than one year at September 30, 2014, $214.8 million is in Malaysia, $125.9 million is in the U.S. and $33.7 million is in Brunei.  In all three geographical areas, either further appraisal or development drilling is planned and/or development studies/plans are in various stages of completion.

The Company has entered into an agreement to sell 30% of its working interest in most of its oil and gas properties in Malaysia.  The sale price of $2.0 billion is subject to normal closing costs and adjustments.  The sale is expected to close in two phases, with 20% being completed in December 2014 and 10% being completed in the first quarter 2015.

See also Note E for discussion regarding a capital lease of production equipment at the Kakap field.