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Last Update:
March 1, 2012
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Capitalized exploration well-drilling costs: suspended well costs

Exploratory drilling costs are capitalized until the drilling of the well is complete. If hydrocarbons are found, and, subject to further appraisal activity which may include the drilling of further wells, are likely to be capable of commercial development, the costs continue to be carried under construction in progress. All such carried costs are subject to technical, commercial and management review at least once a year to confirm the continued intent to develop or otherwise extract value from the discovery. When this is no longer the case, the costs are written off. If proven reserves of oil or natural gas are determined and development is sanctioned, the relevant expenditure is transferred to machinery and technical equipment. Unsuccessful exploration wells are impaired in exploration expenses.

The following table indicates the changes to the company’s capitalized exploration well-drilling costs.

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Capitalized exploration well-drilling costs (million €)1

 

2011

2010

1

Only fully consolidated companies

As of January 1

254

175

Additions pending determination of proven reserves

120

112

Capitalized exploratory well costs charged to expense

(26)

(29)

Reclassifications to wells, facilities and equipment

(34)

(4)

As of December 31

314

254

The following table provides an aging of capitalized well costs, the amounts capitalized and, on the last line, the number of suspended exploration wells.

  Download (Download XLS xls, 18 kB)

Capitalized exploration well-drilling costs (million €)1

 

2011

2010

1

Only fully consolidated companies

Wells for which drilling is not complete

33

54

Wells capitalized less than one year

63

30

Wells capitalized more than one year

218

170

Total

314

254

 

 

 

Number of suspended wells

32

29

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