Property, Plant and Equipment

9 Months Ended

Sep. 30, 2011

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, 2011, the Company had total capitalized exploratory well costs pending the determination of proved reserves of $529.2 million. The following table reflects the net changes in capitalized exploratory well costs during the nine-month periods ended September 30, 2011 and 2010.


(Thousands of dollars)	2011		2010
Beginning balance at January 1	$	497,765		369,862
Additions pending the determination of proved reserves		31,481		89,797
Reclassifications to proved properties based on the determination of proved reserves		0		0

Balance at September 30	$	529,246		459,659

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,
	2011						2010
(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	$	92,752		15		5	$	83,642		13		5
One to two years		69,591		9		1		118,776		12		3
Two to three years		115,924		8		3		50,604		4		4
Three years or more		250,979		37		7		206,637		32		3

	$	529,246		69		16	$	459,659		61		15

Of the $436.5 million of exploratory well costs capitalized more than one year at September 30, 2011, $273.1 million is in Malaysia, $137.5 million is in the U.S., $15.3 million is in Republic of the Congo, and $10.6 million is in Canada. In Malaysia either further appraisal or development drilling is planned and/or development studies/plans are in various stages of completion. In the U.S. drilling and development operations are planned. In Republic of the Congo further appraisal drilling is planned. In Canada a drilling and development program continues.

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

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