| |
Standardized Measure of Discounted Future Net Cash Flows from Proved Reserves
Future net cash flows were calculated by applying the respective year end prices to the Company’s estimated future production of proved reserves
and deducting estimates of future development, asset retirement, production and transportation costs and income taxes. Future costs have been
estimated based on existing economic and operating conditions. Future income taxes have been estimated based on statutory tax rates enacted
at year end. The present values of the estimated future cash flows were determined by applying a 10% discount rate prescribed by the FASB.
In order to increase the comparability between companies, the standardized measure of discounted future net cash flows necessarily employs
uniform assumptions that do not necessarily reflect management’s best estimate of future events and anticipated outcomes. Accordingly, the
Company does not believe that the standardized measure of discounted future net cash flows will be representative of actual future net cash flows
and should not be considered to represent the fair market value of the oil and gas properties. Actual future net cash flows will differ significantly
from those estimated due to, but not limited to, the following:
- production rates will differ from those estimated both in terms of timing and amount. For example, future production may include significant
additional volumes from unproved reserves;
- future prices and economic conditions will differ from those at year end. For example, changes in prices increased the discounted future net cash
flows by $3.5 billion in 2004;
- future production and development costs will be determined by future events and will differ from those at year end; and
- estimated income taxes will differ in terms of amounts and timing dependent on the above factors, changes in enacted rates and the impact
of future expenditures on unproved properties.
The standardized measure of discounted future net cash flows was prepared using the following prices:
| |
|
2004 |
2003 |
2002 |
| Crude oil and liquids ($/bbls) |
North America |
34.27 |
33.32 |
42.07 |
| |
North Sea |
44.65 |
37.89 |
46.84 |
| |
Southeast Asia |
44.01 |
41.71 |
49.22 |
| |
Sudan |
- |
- |
44.09 |
| |
Algeria |
48.71 |
38.91 |
48.37 |
| |
Trinidad |
42.67 |
39.12 |
45.72 |
| |
|
42.66 |
37.04 |
45.13 |
| Natural gas ($/mcf) |
North America |
7.32 |
6.32 |
6.06 |
| |
North Sea |
6.25 |
5.55 |
5.59 |
| |
Southeast Asia |
3.54 |
3.74 |
4.94 |
| |
Trinidad |
1.81 |
1.03 |
1.26 |
| |
|
5.47 |
5.17 |
5.43 |
Principle Sources of Changes in Discounted Cash Flows
| Years ended December 31 (millions of Canadian dollars) |
2004 |
2003 |
2002 |
| Sales of oil and gas produced, net of productions costs |
(3,866) |
(3,308) |
(3,307) |
| Net change in prices |
3,506 |
(3,200) |
9,709 |
| Net change in transportation costs |
(954) |
- |
- |
| Net change in production costs |
410 |
(357) |
(1,990) |
| Net change in future development and site restoration costs |
(638) |
(87) |
(637) |
| Development costs incurred during the year |
623 |
672 |
764 |
| Extensions, discoveries, and improved recovery |
2,386 |
1,229 |
1,863 |
| Revisions of previous reserve estimates |
(615) |
92 |
37 |
| Net purchases and sales of reserves in place |
150 |
(1,225) |
17 |
| Accretion of discount |
1,263 |
1,555 |
972 |
| Net change in taxes |
(598) |
2,399 |
(3,342) |
| Other |
257 |
(44) |
(97) |
| Net change |
1,924 |
(2,274) |
3,989 |
| Balance, beginning of year |
8,236 |
10,510 |
6,521 |
| Balance, end of year |
10,160 |
8,236 |
10,510 |
Discounted Future Net Cash Flows from Proved Reserves
As at December 31
(millions of Canadian dollars) |
North America |
North Sea |
Southeast Asia |
Sudan |
Algeria |
Trinidad |
Total |
| 2004 |
Future cash inflows1 |
20,825 |
14,916 |
7,525 |
- |
1,071 |
854 |
45,191 |
| |
Future costs |
|
|
|
|
|
|
|
| |
Transportation |
(501) |
(494) |
(655) |
- |
(61) |
- |
(1,711) |
| |
Production |
(4,847) |
(7,028) |
(1,235) |
- |
(148) |
(128) |
(13,386) |
| |
Development & site restoration |
(2,138) |
(3,214) |
(770) |
- |
(29) |
(114) |
(6,265) |
| |
Future net inflows before income taxes |
13,339 |
4,180 |
4,865 |
- |
833 |
612 |
23,829 |
| |
Future income and production revenue taxes |
(3,650) |
(1,724) |
(1,959) |
- |
(245) |
(262) |
(7,840) |
| |
Future net cash flows |
9,689 |
2,456 |
2,906 |
- |
588 |
350 |
15,989 |
| |
10% discount factor |
(3,845) |
(302) |
(1,402) |
- |
(165) |
(115) |
(5,829) |
| |
Discounted future net cash flows |
5,844 |
2,154 |
1,504 |
- |
423 |
235 |
10,160 |
| 2003 |
Future cash inflows1 |
18,444 |
11,032 |
5,930 |
- |
645 |
928 |
36,979 |
| |
Future costs |
|
|
|
|
|
|
|
| |
Production |
(4,958) |
(5,686) |
(1,107) |
- |
(165) |
(122) |
(12,038) |
| |
Development & site restoration |
(1,490) |
(1,989) |
(697) |
- |
(14) |
(248) |
(4,438) |
| |
Future net inflows before income taxes |
11,996 |
3,357 |
4,126 |
- |
466 |
558 |
20,503 |
| |
Future income and production revenue taxes |
(3,664) |
(1,393) |
(1,601) |
- |
(107) |
(299) |
(7,064) |
| |
Future net cash flows |
8,332 |
1,964 |
2,525 |
- |
359 |
259 |
13,439 |
| |
10% discount factor |
(3,740) |
(147) |
(1,118) |
- |
(86) |
(112) |
(5,203) |
| |
Discounted future net cash flows |
4,592 |
1,817 |
1,407 |
- |
273 |
147 |
8,236 |
| 2002 |
Future cash inflows1 |
19,639 |
13,160 |
6,627 |
4,090 |
675 |
1,143 |
45,334 |
| |
Future costs |
|
|
|
|
|
|
|
| |
Production |
(4,325) |
(5,577) |
(1,040) |
(999) |
(230) |
(157) |
(12,328) |
| |
Development & site restoration |
(995) |
(1,873) |
(709) |
(313) |
(64) |
(368) |
(4,322) |
| |
Future net inflows before income taxes |
14,319 |
5,710 |
4,878 |
2,778 |
381 |
618 |
28,684 |
| |
Future income and production revenue taxes |
(5,654) |
(2,597) |
(2,011) |
(744) |
(31) |
(370) |
(11,407) |
| |
Future net cash flows |
8,665 |
3,113 |
2,867 |
2,034 |
350 |
248 |
17,277 |
| |
10% discount factor |
(3,913) |
(554) |
(1,387) |
(655) |
(97) |
(161) |
(6,767) |
| |
Discounted future net cash flows |
4,752 |
2,559 |
1,480 |
1,379 |
253 |
87 |
10,510 |
|
|
|
|
