Hess 2008 Annual Report Download - page 72

Download and view the complete annual report

Please find page 72 of the 2008 Hess annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 116

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116

5. Property, Plant and Equipment
Property, plant and equipment at December 31 consists of the following:
2008 2007
(Millions of dollars)
Exploration and Production
Unproved properties .......................................... $ 2,265 $ 1,688
Proved properties ............................................ 3,009 3,350
Wells, equipment and related facilities ............................. 20,058 17,865
25,332 22,903
Marketing, Refining and Corporate ................................. 2,105 1,928
Total — at cost ............................................ 27,437 24,831
Less: reserves for depreciation, depletion, amortization and lease impairment . . 11,166 10,197
Property, plant and equipment — net ............................ $16,271 $14,634
In 2008, the Corporation recorded asset impairments at fields located in the United States and U.K. North Sea
totaling $30 million ($17 million after income taxes). In 2007 the Corporation recorded asset impairments at two
mature fields in the U.K. North Sea totaling $112 million ($56 million after income taxes). These impairments are
reflected in depreciation, depletion and amortization.
At December 31, 2008, the Corporation has classified its Gabonese assets as held for sale. As a result, the net
book value of $452 million at December 31, 2008 was reclassified to other current assets. In addition, $169 million
of asset retirement obligations and deferred income taxes were reclassified to accrued liabilities.
The following table discloses the amount of capitalized exploratory well costs pending determination of
proved reserves at December 31, and the changes therein during the respective years:
2008 2007 2006
(Millions of dollars)
Beginning balance at January 1 ................................ $ 608 $399 $ 244
Additions to capitalized exploratory well costs pending the
determination of proved reserves ........................... 560 229 299
Reclassifications to wells, facilities, and equipment based on the
determination of proved reserves ........................... (67) (20) (144)
Capitalized exploratory well costs charged to expense.............. (7) ——
Ending balance at December 31 ................................ $1,094 $608 $ 399
Number of wells at end of year ................................ 45 30 28
The preceding table excludes exploratory dry hole costs of $203 million, $65 million and $241 million in 2008,
2007 and 2006, respectively, which were incurred and subsequently expensed in the same year.
At December 31, 2008, exploratory drilling costs capitalized in excess of one year past completion of drilling
were as follows (in millions):
2007 .................................................................. $109
2006 .................................................................. 216
2003 to 2005 ............................................................ 56
$381
56
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)