Capitalized Costs
The following table presents the aggregate capitalized costs subject to amortization relating to our
oil and gas acquisition, exploration and development activities, and the aggregate related accumulated
depreciation, depletion and amortization, or DD&A, and impairment (in thousands):
December 31,
2011
2010
Consolidated entities
Property subject to amortization . . . . . . . $ 12,016,252 $ 9,975,056
Accumulated DD&A and impairment . . .
(6,823,722) (6,176,007)
$ 5,192,530 $ 3,799,049
Entity’s share of equity investee
(1)
Unproved properties . . . . . . . . . . . . . . . . $ 497,955 $ 341,625
Proved properties . . . . . . . . . . . . . . . . . .
805,264
789,584
Accumulated DD&A and impairment . . .
(613,740)
(552,682)
$ 689,479 $ 578,527
(1) Amounts relate to our equity investment in McMoRan acquired on December 30, 2010.
Our average DD&A rate per BOE was $17.76, $15.87 and $12.79 in 2011, 2010 and 2009,
respectively.
Costs not subject to amortization
The following table summarizes the categories of costs comprising the amount of unproved
properties not subject to amortization by the year in which such costs were incurred (in thousands):
December 31,
Total
2011
2010
(1)
2009
(2)
Prior
Acquisition costs . . . . . . . . . . . $ 2,148,839 $ 29,249 $ 799,200 $ 917,214 $ 403,176
Exploration costs . . . . . . . . . . .
55,987
43,755
9,506
896
1,830
Capitalized interest . . . . . . . . .
204,623
81,367
83,867
32,043
7,346
$ 2,409,449 $ 154,371 $ 892,573 $ 950,153 $ 412,352
(1) Includes amounts attributable to our Eagle Ford Shale acquisition in the fourth quarter of 2010. See Note 2 – Acquisitions.
(2) Includes amounts attributable to the September 2009 pre-payment of the Haynesville Carry associated with the Chesapeake
acquisition. See Note 2 – Acquisitions.
The costs of unproved oil and gas properties are excluded from amortization until the properties
are evaluated. Costs are transferred into the amortization base on an ongoing basis as the properties
are evaluated and proved reserves are established or impairment is determined. Unproved properties
are assessed periodically, at least annually, to determine whether impairment has occurred. We
assess properties on an individual basis or as a group if properties are individually insignificant. The
assessment considers the following factors, among others: intent to drill, remaining lease term,
geological and geophysical evaluations, drilling results and activity, the assignment of proved reserves
and the economic viability of development if proved reserves are assigned. During any period in which
these factors indicate an impairment, the cumulative drilling costs incurred to date for such property
and all or a portion of the associated leasehold costs are transferred to the full cost pool and are then
subject to amortization. The transfer of costs into the amortization base involves a significant amount of
judgment and may be subject to changes over time based on our drilling plans and results, geological
and geophysical evaluations, the assignment of proved reserves, availability of capital, and other
F-55