Investment in Oil and Gas Properties

3 Months Ended

Mar. 31, 2015

Extractive Industries [Abstract]

Investment in Oil and Gas Properties

Note 9 – 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 (adjusted for hedges and 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 March 31, 2015, our ceiling test computation resulted in a write-down of our U.S. oil and gas properties of $491.4 million based on twelve month average prices, net of applicable differentials, of $78.99 per barrel of oil, $2.96 per Mcf of natural gas and $28.82 per barrel of natural gas liquids (“NGLs”). The write-down was decreased by $28.7 million as a result of hedges.

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 March 31, 2015 and December 31, 2014, were $44.2 million and $36.6 million, respectively, of capital expenditures related to our oil and gas property investments in Canada.