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93 93
and gas project at the Valhall Field in Norway is also being developed in phases. A summary of the development status of each of the
projects follows:
xJDA – This natural gas project in the Gulf of Thailand currently has a central processing platform and twelve wellhead
platforms. In 2014, the operator continued development drilling and successfully installed one new wellhead platform.
Further development drilling is planned for 2015 and completion of a major booster compression project is scheduled for
early 2016.
xValhall – The multi-year Valhall redevelopment project was completed in 2013. The project included the installation of a
new production, utilities and accommodation platform, and expansion of gross production capacity to 120,000 barrels of
liquids per day and 143,000 mcf of natural gas per day. The operator is currently executing a multi-year development
drilling program.
Production Sharing Contracts
The Corporation’s proved reserves include crude oil and natural gas reserves relating to long-term agreements with governments or
authorities in which the Corporation has the legal right to produce or has a revenue interest in the production. Proved reserves from
these production sharing contracts for each of the three years ended December 31, 2014 are presented separately below, as well as
volumes produced and received during 2014, 2013 and 2012 from these production sharing contracts.
Crude Oil, Condensate &
Natural Gas Liquids Natural Gas
Asia
United United and
States Europe Africa Asia Total States Europe Africa Total
(Millions of barrels) (Millions of mcf)
Production Sharing Contracts
Proved Reserves*
At December 31, 2012 ..................
—
—
76 40 116
—
—
1,183 1,183
At December 31, 2013 ..................
—
—
57 18 75
—
—
914 914
At December 31, 2014 ..................
—
—
52 7 59
—
—
913 913
Production
2012 ..............................................
—
—
20 6 26
—
—
137 137
2013 ..............................................
—
—
18 3 21
—
—
122 122
2014 ..............................................
—
—
18 1 19
—
—
107 107
* Includes natural gas liquids of - million barrels in 2014, 3 million barrels in 2013 and 5 million barrels in 2012.
Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves
Future net cash flows are calculated by applying prescribed oil and gas selling prices used in determining year-end reserve
estimates (adjusted for price changes provided by contractual arrangements) to estimated future production of proved oil and gas
reserves, less estimated future development and production costs, which are based on year-end costs and existing economic
assumptions. Future income tax expenses are computed by applying the appropriate year-end statutory tax rates to the pre-tax net cash
flows, as well as including the effect of tax deductions and tax credits and allowances relating to the Corporation’s proved oil and gas
reserves. Future net cash flows are discounted at the prescribed rate of 10%.
The selling prices of crude oil and natural gas are highly volatile. The prices required to be used for the discounted future net cash
flows are on the same basis for determining proved oil and gas reserves and do not include the effects of commodity hedges. As a
result, selling prices used in the disclosure of future net cash flows may not be representative of future selling prices. In addition, the
discounted future net cash flow estimates do not include exploration expenses, interest expense or corporate general and
administrative expenses. The amount of tax deductions, credits, and allowances relating to the Corporation’s proved oil and gas
reserves can change year to year due to factors including changes in proved reserves, variances in actual pre-tax cash flows from
forecasted pre-tax cash flows in historical periods, and the impact to year-end carryforward tax attributes associated with deducting in
the Corporation’s income tax returns exploration expenses, interest expense, and corporate general and administrative expenses that
are not contemplated in the standardized measure computations. The future net cash flow estimates could be materially different if
other assumptions were used.
The standardized measure of discounted future net cash flows relating to proved oil and gas reserves at December 31, 2012 and
January 1, 2012 have been restated to include excess carryforward deductions relating to proved oil and gas reserves in the
computation of future income tax expenses at each date to be consistent with the computation of future income taxes at December 31,
2014 and 2013. In prior Form 10-K filings, excess carryforward deductions relating to proved oil and gas reserves were not included