Cobalt Annual Report 2015 - page 111

Cobalt International Energy, Inc.
Notes to Consolidated Financial Statements (Continued)
F-19
8. Property, Plant, and Equipment (Continued)
Capitalized Exploration Well Costs
If an exploration well provides evidence as to the existence of sufficient quantities of hydrocarbons to justify evaluation for
potential development, drilling costs associated with the well are initially capitalized, or suspended, pending a determination as to
whether a commercially sufficient quantity of proved reserves can be attributed to the area as a result of drilling. This determination
may take longer than one year in certain areas (generally, deepwater and international locations) depending upon, among other things,
(i) the amount of hydrocarbons discovered, (ii) the outcome of planned geological and engineering studies, (iii) the need for additional
appraisal drilling activities to determine whether the discovery is sufficient to support an economic development plan and (iv) the
requirement for government sanctioning in international locations before proceeding with development activities. The following tables
reflect the Company’s net changes in and the cumulative costs of capitalized exploration well costs (excluding any related leasehold
costs):
December 31,
2015
December 31,
2014
December 31,
2013
($ in thousands)
Beginning of period .................................................................. $ 330,099 $ 233,143 $ 208,274
Additions to capitalized exploration
Exploration well costs .........................................................
285,118
151,687
195,499
Capitalized interest..............................................................
24,161
9,522
4,880
Reclassifications to wells, facilities, and equipment
based on determination of proved reserves............................
(38,446)
Amounts charged to expense(1) ...............................................
(24,120)
(64,253) (137,064)
End of period ............................................................................ $ 615,258 $ 330,099 $ 233,143
(1)
The amount of $24.1 million, $64.3 million, and $137.1 million for the years ended December 31, 2015, 2014, and
2013, respectively, represents impairment charges on exploration wells drilled in the U.S. Gulf of Mexico which
did not encounter commercial hydrocarbons.
December 31,
2015
December 31,
2014
($ in thousands)
Cumulative costs:
Exploration well costs .......................................................... $ 576,694 $
315,697
Capitalized interest ...............................................................
38,564
14,402
$ 615,258 $
330,099
Well costs capitalized for a period greater than one year after completion of drilling (included in the table above) are
summarized as follows:
Year Ended December 31,
2015
2014
2013
($ in thousands)
U.S. Gulf of Mexico ................................................................. $ 351,753 $ 233,141 $ 186,510
Number of projects with exploration well costs that
have been capitalized more than a year .................................
7
6
3
The above capitalized exploration well costs suspended over a year are pending ongoing evaluation including, but not limited to,
results of additional appraisal drilling, well-test analysis, additional geological and geophysical data and approval of a development
plan. Management believes these discoveries exhibit sufficient indications of hydrocarbons to justify potential development and is
actively pursuing efforts to fully assess them. If additional information becomes available that raises substantial doubt as to the
economic or operational viability of these discoveries, the associated costs will be expensed at that time.
1...,101,102,103,104,105,106,107,108,109,110 112,113,114,115,116,117,118,119,120,121,...136
Powered by FlippingBook