This excerpt taken from the COP 10-K filed Feb 27, 2006.
***Includes amounts resulting from changes in the timing of production.
The net change in prices, and production and transportation costs is the beginning-of-the-year reserve-production forecast multiplied by the net annual change in the per-unit sales price, and production and transportation cost, discounted at 10 percent.
Purchases and sales of reserves in place, along with extensions, discoveries and improved recovery, are calculated using production forecasts of the applicable reserve quantities for the year multiplied by the end-of-the-year sales prices, less future estimated costs, discounted at 10 percent.
The accretion of discount is 10 percent of the prior years discounted future cash inflows, less future production, transportation and development costs.
The net change in income taxes is the annual change in the discounted future income tax provisions.