Investment in Oil and Gas Properties

9 Months Ended

Sep. 30, 2014

Extractive Industries [Abstract]

Investment in Oil and Gas Properties

Note 10 – Investment in Oil and Gas Properties

Under the full cost method of accounting, we compare, at the end of each financial reporting period, the present value of estimated future net cash flows from proved reserves (excluding cash flows related to estimated abandonment costs) to the net capitalized costs of proved oil and gas properties net of related deferred taxes. We refer to this comparison as a “ceiling test.” If the net capitalized costs of proved oil and gas properties exceed the estimated discounted future net cash flows from proved reserves, we are required to write-down the value of our oil and gas properties to the value of the discounted cash flows. At September 30, 2014, our ceiling test computation resulted in a write-down of our U.S. oil and gas properties of $47.1 million based on twelve month average prices, net of applicable differentials, of $94.94 per barrel of oil, $4.19 per Mcf of natural gas and $41.33 per barrel of natural gas liquids.

In April 2013, we entered into an agreement to participate in the drilling of exploratory wells in Canada. Included in unevaluated oil and gas property costs at September 30, 2014 and December 31, 2013, were $25.7 million and $10.6 million, respectively, of capital expenditures related to our oil and gas property investments in Canada.