Notes to Consolidated Financial Statements

Note 11 — Properties, Plants and Equipment

Properties, plants and equipment (PP&E) are recorded at cost. Within the E&P segment, depreciation is on a unit-of-production basis, so depreciable life will vary by field. In the R&M segment, investments in refining manufacturing facilities are generally depreciated on a straight-line basis over a 25-year life, pipeline assets over a 45-year life, and service station buildings and fixed improvements over a 30-year life. The company’s investment in PP&E, with accumulated depreciation, depletion and amortization (Accum. DD&A), at December 31 was:

Suspended Wells

In April 2005, the FASB issued FSP FAS 19-1, “Accounting for Suspended Well Costs” (FSP FAS 19-1). This FSP was issued to address whether there were circumstances that would permit the continued capitalization of exploratory well costs beyond one year, other than when further exploratory drilling is planned and major capital expenditures would be required to develop the project. We adopted FSP FAS 19-1 effective January 1, 2005. There was no impact on our consolidated financial statements from the adoption.

The following table reflects the net changes in suspended exploratory well costs during 2006, 2005 and 2004:

The following table provides an aging of suspended well balances at December 31, 2006, 2005 and 2004:

The following table provides a further aging of those exploratory well costs that have been capitalized for more than one year since the completion of drilling as of December 31, 2006: