Nabors Industries (NBR)

 

The Company uses the full-cost method of accounting for its investment in oil and gas properties. Under this method, the Company capitalizes all acquisition, exploration, and development costs incurred for the purpose of finding oil and gas reserves, including salaries, benefits, and other internal costs directly attributable to these activities. The Company capitalized $1.5 million and $0.2 million of internal costs in 2008 and 2007, respectively. Costs associated with production and general corporate activities, however, are expensed in the period incurred. The Company also includes the present value of its dismantlement, restoration, and abandonment costs within the capitalized oil and gas property balance (see “Asset Retirement Obligation” below). Unless a significant portion of the Company’s proved reserve quantities is sold (greater than 25%), proceeds from the sale of oil and gas properties are accounted for as a reduction to capitalized costs, and gains and losses are not recognized unless such adjustments would significantly alter the relationship between capitalized costs and proved reserves of oil and gas.

 

Depletion of exploration and development costs and depreciation of production equipment is computed using the units-of-production method based upon estimated proved oil and gas reserves. The costs of unproved properties are withheld from the depletion base until such time as they are either developed or abandoned. The properties are reviewed at least annually for impairment, and if impaired are reclassified to proved property and included in the ceiling test and depletion calculations.

 

Under the full cost method of accounting, a ceiling test is performed at least annually. The full cost ceiling test is an impairment test prescribed by SEC Regulation S-X Rule 4-10. The ceiling test determines a limit on the book value of oil and gas properties. The capitalized costs of proved oil and gas properties, net of accumulated depreciation, depletion, and amortization (DD&A), may not exceed the estimated future net cash flows from proved oil and gas reserves, excluding future cash outflows associated with settling asset retirement obligations that have been accrued on the balance sheet, generally using prices in effect at the end of the period held flat for the life of production, discounted at 10%, plus the cost of unevaluated properties and major development projects excluded from the costs being amortized. If capitalized costs exceed this limit, the excess is charged to expense and reflected as additional accumulated DD&A.

 

The Company recorded a $415.8 million noncash write-down of the carrying value of the Company’s proved oil and gas properties as of December 31, 2008, as a result of the ceiling test limitations, which is reflected as impairment in the accompanying statement of consolidated operations.

 

Gathering facilities, certain other property and equipment, and furniture and fixtures are depreciated using the straight-line method based on the estimated useful lives of the respective assets, generally ranging from 3 to 30 years. Leasehold improvements are amortized over the shorter of their economic lives or the lease term. Repairs and maintenance costs are expensed in the period incurred.

 

 

The Company uses the full-cost method of accounting for its investment in oil and gas properties. Under this method, the Company capitalizes all acquisition, exploration, and development costs incurred for the purpose of finding oil and gas reserves, including salaries, benefits, and other internal costs directly attributable to these activities. The Company capitalized $1.5 million and $0.2 million of internal costs in 2008 and 2007, respectively. Costs associated with production and general corporate activities, however, are expensed in the period incurred. The Company also includes the present value of its dismantlement, restoration, and abandonment costs within the capitalized oil and gas property balance (see “Asset Retirement Obligation” below). Unless a significant portion of the Company’s proved reserve quantities is sold (greater than 25%), proceeds from the sale of oil and gas properties are accounted for as a reduction to capitalized costs, and gains and losses are not recognized unless such adjustments would significantly alter the relationship between capitalized costs and proved reserves of oil and gas.

 

Depletion of exploration and development costs and depreciation of production equipment is computed using the units-of-production method based upon estimated proved oil and gas reserves. The costs of unproved properties are withheld from the depletion base until such time as they are either developed or abandoned. The properties are reviewed at least annually for impairment, and if impaired are reclassified to proved property and included in the ceiling test and depletion calculations.

 

Under the full cost method of accounting, a ceiling test is performed at least annually. The full cost ceiling test is an impairment test prescribed by SEC Regulation S-X Rule 4-10. The ceiling test determines a limit on the book value of oil and gas properties. The capitalized costs of proved oil and gas properties, net of accumulated depreciation, depletion, and amortization (DD&A), may not exceed the estimated future net cash flows from proved oil and gas reserves, excluding future cash outflows associated with settling asset retirement obligations that have been accrued on the balance sheet, generally using prices in effect at the end of the period held flat for the life of production, discounted at 10%, plus the cost of unevaluated properties and major development projects excluded from the costs being amortized. If capitalized costs exceed this limit, the excess is charged to expense and reflected as additional accumulated DD&A.

 

The Company recorded a $415.8 million noncash write-down of the carrying value of the Company’s proved oil and gas properties as of December 31, 2008, as a result of the ceiling test limitations, which is reflected as impairment in the accompanying statement of consolidated operations.

 

Gathering facilities, certain other property and equipment, and furniture and fixtures are depreciated using the straight-line method based on the estimated useful lives of the respective assets, generally ranging from 3 to 30 years. Leasehold improvements are amortized over the shorter of their economic lives or the lease term. Repairs and maintenance costs are expensed in the period incurred.

 

 

The Company uses the full-cost method of accounting for its
investment in oil and gas properties. Under this method, the
Company capitalizes all acquisition, exploration, and
development costs incurred for the purpose of finding oil and
gas reserves, including salaries, benefits, and other internal
costs directly attributable to these activities. The Company
capitalized $1.5 million and $0.2 million of internal
costs in 2008 and 2007, respectively. Costs associated with
production and general corporate activities, however, are
expensed in the period incurred. The Company also includes the
present value of its dismantlement, restoration, and abandonment
costs within the capitalized oil and gas property balance (see
“Asset Retirement Obligation” below). Unless a
significant portion of the Company’s proved reserve
quantities is sold (greater than 25%), proceeds from the sale of
oil and gas properties are accounted for as a reduction to
capitalized costs, and gains and losses are not recognized
unless such adjustments would significantly alter the
relationship between capitalized costs and proved reserves of
oil and gas.

 

Depletion of exploration and development costs and depreciation
of production equipment is computed using the
units-of-production
method based upon estimated proved oil and gas reserves. The
costs of unproved properties are withheld from the depletion
base until such time as they are either developed or abandoned.
The properties are reviewed at least annually for impairment,
and if impaired are reclassified to proved property and included
in the ceiling test and depletion calculations.

 

Under the full cost method of accounting, a ceiling test is
performed at least annually. The full cost ceiling test is an
impairment test prescribed by SEC
Regulation S-X
Rule 4-10.
The ceiling test determines a limit on the book value of oil and
gas properties. The capitalized costs of proved oil and gas
properties, net of accumulated depreciation, depletion, and
amortization (DD&A), may not exceed the estimated future
net cash flows from proved oil and gas reserves, excluding
future cash outflows associated with settling asset retirement
obligations that have been accrued on the balance sheet,
generally using prices in effect at the end of the period held
flat for the life of production, discounted at 10%, plus the
cost of unevaluated properties and major development projects
excluded from the costs being amortized. If capitalized costs
exceed this limit, the excess is charged to expense and
reflected as additional accumulated DD&A.

 

The Company recorded a $415.8 million noncash write-down of
the carrying value of the Company’s proved oil and gas
properties as of December 31, 2008, as a result of the
ceiling test limitations, which is reflected as impairment in
the accompanying statement of consolidated operations.

 

Gathering facilities, certain other property and equipment, and
furniture and fixtures are depreciated using the straight-line
method based on the estimated useful lives of the respective
assets, generally ranging from 3 to 30 years. Leasehold
improvements are amortized over the shorter of their economic
lives or the lease term. Repairs and maintenance costs are
expensed in the period incurred.

 

 

The Company uses the full-cost method of accounting for its
investment in oil and gas properties. Under this method, the
Company capitalizes all acquisition, exploration, and
development costs incurred for the purpose of finding oil and
gas reserves, including salaries, benefits, and other internal
costs directly attributable to these activities. The Company
capitalized $1.5 million and $0.2 million of internal
costs in 2008 and 2007, respectively. Costs associated with
production and general corporate activities, however, are
expensed in the period incurred. The Company also includes the
present value of its dismantlement, restoration, and abandonment
costs within the capitalized oil and gas property balance (see
“Asset Retirement Obligation” below). Unless a
significant portion of the Company’s proved reserve
quantities is sold (greater than 25%), proceeds from the sale of
oil and gas properties are accounted for as a reduction to
capitalized costs, and gains and losses are not recognized
unless such adjustments would significantly alter the
relationship between capitalized costs and proved reserves of
oil and gas.

 

Depletion of exploration and development costs and depreciation
of production equipment is computed using the
units-of-production
method based upon estimated proved oil and gas reserves. The
costs of unproved properties are withheld from the depletion
base until such time as they are either developed or abandoned.
The properties are reviewed at least annually for impairment,
and if impaired are reclassified to proved property and included
in the ceiling test and depletion calculations.

 

Under the full cost method of accounting, a ceiling test is
performed at least annually. The full cost ceiling test is an
impairment test prescribed by SEC
Regulation S-X
Rule 4-10.
The ceiling test determines a limit on the book value of oil and
gas properties. The capitalized costs of proved oil and gas
properties, net of accumulated depreciation, depletion, and
amortization (DD&A), may not exceed the estimated future
net cash flows from proved oil and gas reserves, excluding
future cash outflows associated with settling asset retirement
obligations that have been accrued on the balance sheet,
generally using prices in effect at the end of the period held
flat for the life of production, discounted at 10%, plus the
cost of unevaluated properties and major development projects
excluded from the costs being amortized. If capitalized costs
exceed this limit, the excess is charged to expense and
reflected as additional accumulated DD&A.

 

The Company recorded a $415.8 million noncash write-down of
the carrying value of the Company’s proved oil and gas
properties as of December 31, 2008, as a result of the
ceiling test limitations, which is reflected as impairment in
the accompanying statement of consolidated operations.

 

Gathering facilities, certain other property and equipment, and
furniture and fixtures are depreciated using the straight-line
method based on the estimated useful lives of the respective
assets, generally ranging from 3 to 30 years. Leasehold
improvements are amortized over the shorter of their economic
lives or the lease term. Repairs and maintenance costs are
expensed in the period incurred.