Woodside Petroleum Ltd|Financial Statements 115
B.3 Oil and gas properties
Landand
buildings
Transferred
explorationand
evaluation
Plantand
equipment
Marinevessels
andcarriers
Projectsin
development Total
USm USm USm USm USm USm
Year ended 31 December 2018
Carrying amount at 1 January 2018
Additions - - () -
Depreciation and amortisation () () () () - ()
Impairment loss - - - () - ()
Completions and transfers () () ()
Carrying amount at 31 December 2018
At 31 December 2018
Historical cost
Accumulated depreciation and impairment () () () () () ()
Net carrying amount
Year ended 31 December 2017
Carrying amount at 1 January 2017
Additions - - -
Depreciation and amortisation () () () () - ()
Completions and transfers () -
Carrying amount at 31 December 2017
At 31 December 2017
Historical cost
Accumulated depreciation and impairment () () () () () ()
Net carrying amount
Recognition and measurement
Oil and gas properties are stated at cost less accumulated
depreciation and impairment charges. Oil and gas properties
include initial cost to acquire, construct, install or complete
production and infrastructure facilities such as pipelines and
platforms, capitalised borrowing costs, transferred exploration and
evaluation assets, development wells and the estimated cost of
dismantling and restoration.
Subsequent capital costs, including major maintenance, are
included in the asset’s carrying amount only when it is probable
that future economic benefits associated with the item will flow to
the Group and the cost of the item can be measured reliably.
Depreciation and amortisation
Oil and gas properties and other plant and equipment are
depreciated to their estimated residual values at rates based on
their expected useful lives.
Transferred exploration and evaluation and oshore plant and
equipment are depreciated using the unit of production basis
over proved plus probable reserves or proved reserves for late
life assets. Onshore plant and equipment is depreciated using
a straight-line basis over the lesser of useful life and the life of
proved plus probable reserves. On a straight-line basis the assets
have an estimated useful life of 5-50 years.
All other items of oil and gas properties are depreciated using the
straight-line method over their useful life. They are depreciated
as follows:
• Buildings – 24-40 years;
• Marine vessels and carriers –
10-40 years;
• Other plant and equipment –
5-15 years; and
• Land is not depreciated.
Impairment
Refer to Note B.4 for details on impairment.
Capital commitments
The Group has capital expenditure commitments contracted for,
but not provided for in the financial statements of US$331 million
(2017: US$535 million).
Key estimates and judgements
Reserves
The estimations of reserves requires significant management
judgement and interpretation of complex geological and geophysical
models in order to make an assessment of the size, shape, depth and
quality of reservoirs, and their anticipated recoveries.
Estimates of oil and natural gas reserves are used to calculate
depreciation, depletion and amortisation charges for the Group’s oil
and gas properties. Judgement is used in determining the reserve base
applied to each asset. Typically, late life oil assets use proved reserves.
Estimates are reviewed at least annually or when there are changes
in the economic circumstances impacting specific assets or asset
groups. These changes may impact depreciation, asset carrying
values, restoration provisions and deferred tax balances. If proved
reserves estimates are revised downwards, earnings could be
aected by higher depreciation expense or an immediate write-down
of the asset’s carrying value.
For more information regarding reserve assumptions, refer to the
reserves and resources statement on pages 64–67 of the
Annual Report.
Depreciation and amortisation
Judgment is required in determing the commencement of
depreciation and amortisation for an asset and is at the point that the
project is ready for start up.
NOTES TO THE FINANCIAL STATEMENTS
B. PRODUCTION AND GROWTH ASSETS
for the year ended 31 December 2018