Capitalized Exploratory Well Costs and Undeveloped Leasehold Costs

6 Months Ended

Jun. 30, 2019

Capitalized Exploratory Well Costs and Undeveloped Leasehold Costs

Note 5. Capitalized Exploratory Well Costs and Undeveloped Leasehold Costs

Capitalized Exploratory Well Costs We capitalize exploratory well costs until a determination is made that the well has found proved reserves or is deemed noncommercial. On a quarterly basis, we review the status of suspended exploratory well costs and assess the development of these projects. If a well is deemed to be noncommercial, the well costs are charged to exploration expense as dry hole cost.

There were no significant changes to our capitalized exploratory well costs during the period. The following table provides an aging of capitalized exploratory well costs based on the date that drilling commenced:



(millions, except number of projects)	June 30, 2019		December 31, 2018
Exploratory Well Costs Capitalized for a Period of One Year or Less	$	11	$	6
Exploratory Well Costs Capitalized for a Period Greater Than One Year Since Commencement of Drilling	351		348
Capitalized Exploratory Well Costs, End of Period	$	362	$	354
Number of Projects with Exploratory Well Costs That Have Been Capitalized for a Period Greater Than One Year Since Commencement of Drilling	7		7

Undeveloped Leasehold Costs Undeveloped leasehold costs are derived from allocated fair values as a result of business combinations or other purchases of unproved properties and are subject to impairment testing. We reclassify undeveloped leasehold costs to proved property costs when, as a result of exploration and development activities, probable and possible resources are reclassified to proved reserves, including proved undeveloped reserves. On the other hand, if, based upon a change in exploration plans, timing and extent of development activities, availability of capital and suitable rig and drilling

equipment, resource potential, comparative economics, changing regulations and/or other factors, an impairment is indicated, we record exploration expense related to the respective leases or licenses.

Changes in undeveloped leasehold costs were as follows:



(millions)	Six Months Ended June 30, 2019
Undeveloped Leasehold Costs, Beginning of Period	$	2,306
Additions to Undeveloped Leasehold Costs	50
Transfers to Proved Properties	(11		)
Assets Sold	(2		)
Undeveloped Leasehold Costs, End of Period	$	2,343

As of June 30, 2019, undeveloped leasehold costs included $2.1 billion, $100 million, $73 million, and $59 million attributable to the Delaware Basin, Eagle Ford Shale, other US onshore properties, and international properties, respectively. Certain of these costs pertain to acquired leases or licenses that are subject to expiration over the next several years unless production is established on the acreage. Other costs pertain to acreage that is being held by production.