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Capitalization Of Exploratory Well Costs
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6 Months Ended | ||
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Jun. 30, 2011
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| Capitalization Of Exploratory Well Costs | |||
| Capitalization Of Exploratory Well Costs |
ASC Topic 932 - Extractive Industries provides that an exploratory well shall be capitalized as part of the entity's uncompleted wells pending the determination of whether the well has found proved reserves. Further, an exploration well that discovers oil and gas reserves, but those reserves cannot be classified as proved when drilling is completed, shall be capitalized if the well has found a sufficient quantity of reserves to justify its completion as a producing well and the entity is making sufficient progress assessing the reserves and the economic and operating viability of the project. If either condition is not met, the exploration well would be assumed to be impaired and its costs would be charged to expense. In the second and third quarters of 2010, the Company drilled the Southeast Etame No. 1 well with two sidetracks in the Etame Marin block offshore Gabon. The well discovered a five meter sand of oil. Additional evaluation of the well and sidetrack information is in progress. The Company currently has a project underway to evaluate development options for this well in conjunction with other potential initiatives in the Etame Marin block. The Company has capitalized $8.0 million for this well in accordance with the criteria contained in ASC Topic 932. In the second and third quarters of 2011, the Company drilled an exploration well on its Granite Wash formation lease in North Texas. For the period ending June 30, 2011, the Company incurred costs totaling $5.1 million which have been capitalized in accordance with the criteria contained in ASC Topic 932. The fracturing and fluid cleanout operations are underway and initial liquid and gas sales are expected from this well in the first half of August 2011. |