Property, Plant and Equipment

9 Months Ended

Sep. 30, 2023

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Note D – Property, Plant and Equipment

Exploratory Wells

Under Financial Accounting Standards Board guidance, 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.

As of September 30, 2023, the Company had total capitalized exploratory well costs pending the determination of proved reserves of $185.5 million. The following table reflects the net changes in capitalized exploratory well costs during the nine-month periods ended September 30, 2023 and 2022.

(Thousands of dollars)	2023		2022
Beginning balance at January 1	$	171,860	$	179,481
Additions pending the determination of proved reserves	40,825		22,275
Reclassifications to proved properties based on the   determination of proved reserves	(1,065)		–
Capitalized exploratory well costs charged to expense	(26,143)		(20,295)
Balance at September 30	$	185,477	$	181,461

Capital additions of $40.8 million in 2023 are primarily related to Oso #1 well (Atwater Valley 138) and LDV-4X in Vietnam. In the first quarter of 2023, drilling of the Oso #1 well was temporarily suspended prior to reaching the objective. The Company plans to return to the well in the fourth quarter of 2023. Capitalized well costs charged to dry hole expense of $26.1 million for the nine months ended September 30, 2023 are related to Cholula-1EXP well in Mexico and Chinook #7 (Walker Ridge 425) exploration well in the Gulf of Mexico. The preceding table excludes well costs of $81.7 million incurred and expensed directly to dry hole during the nine months ended September 30, 2023, related to the Chinook #7 (Walker Ridge 425) exploration well in the Gulf of Mexico.

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,
	2023				2022
(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	$	–	–	–	$	8,851	2	2
One to two years	38,817		1	1	8,489		2	2
Two to three years	2,698		1	1	–		–	–
Three years or more	143,962		4	3	164,121		6	3
	$	185,477	6	5	$	181,461	10	7

Of the $185.5 million of exploratory well costs capitalized more than one year at September 30, 2023, $112.8 million was in Vietnam, $65.3 million was in the U.S., $4.7 million was in Canada, and $2.7 million was in Brunei. In all geographical areas, either further appraisal or development drilling is planned and/or development studies/plans are in various stages of completion. 

Impairments

There were no impairments in the nine months ended September 30, 2023 or 2022.

Divestitures

On September 15, 2023, the Company completed the previously announced divestment of certain non-core operated Kaybob Duvernay assets and all of our non-operated Placid Montney assets, located in Alberta, Canada for net cash proceeds of C$139.0 million. No gain or loss was recorded related to this transaction, and the effective date of the transaction was March 1, 2023.