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PBR » Topics » 4.8 Abandonment of wells and dismantling of areas

This excerpt taken from the PBR 6-K filed Mar 31, 2009.

4.8 Abandonment of wells and dismantling of areas

In accordance with the accounting practice that has been adopted, based on SFAS Pronouncement 143– “Accounting for Asset Retirement Obligations”, issued by the “Financial Accounting Standards Boards” (FASB), the future liability for abandonment of wells and dismantling the production area is stated at its present value, discounted at a risk free rate and is fully recorded at the time of the declaration of commercial viability of each field, as part of the costs of the related assets (property, plant and equipment) as a balancing item to the provision recorded in the liabilities that will bear these expenses.

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