Dominion Power 2003 Annual Report Download - page 98

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96.Dominion 2003
Notes to Consolidated Financial Statements, Continued
In the foregoing determination of future cash inflows, sales
prices for gas and oil were based on contractual arrangements or
market prices at year-end. Future costs of developing and produc-
ing the proved gas and oil reserves reported at the end of each
year shown were based on costs determined at each such year
end, assuming the continuation of existing economic conditions.
Future income taxes were computed by applying the appropriate
year-end or future statutory tax rate to future pretax net cash
flows, less the tax basis of the properties involved, and giving
effect to tax deductions, permanent differences and tax credits.
It is not intended that the FASB’s standardized measure of dis-
counted future net cash flows represent the fair market value of
Dominion’s proved reserves. Dominion cautions that the disclo-
sures shown are based on estimates of proved reserve quantities
and future production schedules which are inherently imprecise
and subject to revision, and the 10% discount rate is arbitrary. In
addition, costs and prices as of the measurement date are used
in the determinations, and no value may be assigned to probable
or possible reserves.
The following tabulation is a summary of changes between
the total standardized measure of discounted future net cash
flows at the beginning and end of each year.
2003 2002 2001
(millions)
Standardized measure of discounted
future net cash flows at January 1 $ 7,805 $ 3,213 $ 8,176
Changes in the year resulting from:
Sales and transfers of gas and oil
produced during the year, less
production costs (1,563) (1,221) (1,038)
Prices and production and
development costs related to
future production 480 3,975 (9,793)
Extensions, discoveries and other
additions, less production and
development costs 1,920 2,039 767
Previously estimated development
costs incurred during the year 182 223 134
Revisions of previous quantity
estimates (918) (152) 62
Accretion of discount 1,149 426 1,117
Income taxes (679) (2,639) 2,949
Acquisition of Louis Dreyfus —1,347
Other purchases and sales of
proved reserves in place 347 799 102
Other (principally timing
of production) 510 1,142 (610)
Standardized measure of
discounted future net cash flows
at December 31 $ 9,233 $ 7,805 $ 3,213