ANNUAL REPORT 2011 - Connacher Oil and Gas

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AR 2011 PG 62 9. EXPLORATION and Evaluation assets (“E&E”) (Canadian dollar in thousands) Upstream Segment – Canada Cost Balance, January 1, 2010 $ 96,162 Additions 25,220 Disposition (172) Transferred to assets classified as held for sale (note 8.1) (8,688) Balance, December 31, 2010 112,522 Additions 22,399 Disposition (13,107) Balance, December 31, 2011 $ 121,814 Accumulated amortization and impairment Balance, January 1, 2010 $ – Charge for the year 4,609 Transferred to assets classified as held for sale (note 8.1) (3,036) Balance, December 31, 2010 1,573 Charge for the year 3,637 Disposition (825) Balance, December 31, 2011 $ 4,385 Carrying amount As at January 1, 2010 $ 96,162 As at December 31, 2010 $ 110,949 As at December 31, 2011 $ 117,429 E&E assets include unproved land and the company’s oil sands projects which are pending the determination of technical feasibility and commercial viability. In 2011, the company sold certain unproved properties relating to its oil sands and conventional operations for the net proceeds of $29.3 million and recorded a gain of $17.4 million. All of the company’s E&E assets are collateralized to secure long–term debt. See note 13.
AR 2011 PG 63 10. PROPERTY, Plant and Equipment (Canadian dollar in thousands) Petroleum and natural gas properties (Upstream) Refining (Downstream) Corporate Total Cost Balance, January 1, 2010 $ 1,029,396 $ 105,789 $ 12,272 $ 1,147,457 Additions 207,219 8,575 2,128 217,922 Dispositions (4,036) – – (4,036) Change in decommissioning liabilities (note 14) 16,023 – – 16,023 Foreign currency translation changes – (5,887) – (5,887) Transferred to assets classified as held for sale (59,679) – – (59,679) (note 8.1) Balance, December 31, 2010 1,188,923 108,477 14,400 1,311,800 Additions 115,946 18,653 1,454 136,053 Change in decommissioning liabilities (note 14) 4,976 – – 4,976 Dispositions (8,986) – – (8,986) Foreign currency translation changes – 2,932 – 2,932 Balance, December 31, 2011 $ 1,300,859 $ 130,062 $ 15,854 $ 1,446,775 Accumulated depletion, depreciation and impairment Balance, January 1, 2010 $ – $ 18,075 $ 5,468 $ 23,543 Depletion and depreciation 61,604 10,470 2,330 74,404 Impairment charge 4,476 – – 4,476 Dispositions (1,676) – – (1,676) Foreign currency translation changes – (1,284) – (1,284) Transferred to assets classified as held for sale (5,331) – – (5,331) (note 8.1) Balance, December 31, 2010 59,073 27,261 7,798 94,132 Depletion and depreciation 82,905 9,278 1,859 94,042 Impairment charge 24,700 – – 24,700 Dispositions (1,590) – – (1,590) Foreign currency translation changes – 857 – 857 Balance, December 31, 2011 $ 165,088 $ 37,396 $ 9,657 $ 212,141 Carrying amount At January 1, 2010 $ 1,029,396 $ 87,714 $ 6,804 $ 1,123,914 At December 31, 2010 $ 1,129,850 $ 81,216 $ 6,602 $ 1,217,668 At December 31, 2011 $ 1,135,771 $ 92,666 $ 6,197 $ 1,234,634 In May 2011, the company acquired certain petroleum and natural gas properties for cash consideration of $9.7 million. The acquisition resulted in the allocation of $11.9 million to upstream property, plant and equipment and $2.2 million to decommissioning liabilities. In 2011, the company sold certain petroleum and natural gas properties relating to its conventional operations for the net proceeds of $9.7 million and recorded a gain of $2.3 million. Due to the reduction of reserves relating to its conventional petroleum and natural gas properties, the company performed an impairment test of its Central Alberta CGU (part of upstream segment) as at December 31, 2011 and recognized an impairment charge of $24.7 million (included in depletion, depreciation, amortization and impairment) based on the difference between the carrying amount and the recoverable amount. The recoverable amount was determined using the value in use calculated using a 10% discounted cash flows. Due to a substantial decrease in natural gas prices, the company performed an impairment test of its Northwest Alberta CGU (part of upstream segment) as at December 31, 2010 and recognized an impairment charge of $4.5 million based on the difference between the carrying amount and the recoverable amount. The recoverable amount was determined using the fair value less costs to sell which was derived from the sale price agreed under the binding sale agreement with the third party. The net carrying amount at December 31, 2011, includes $21.2 million (2010: $8.6 million) of Refining (Downstream) assets in the course of construction and not subject to depreciation. Property, plant and equipment with a carrying cost of $1,223 million (2010: $1,205 million) is collateralized to secure long–term debt. See note 13.
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ANNUAL REPORT 2011 WELL POSITIONED
Page 3 and 4:
AR 2011 PG 1 02 HIGHLIGHTS 05 LETTE
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AR 2011 PG 3 Years ended December 3
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AR 2011 PG 5 Volatility in the oil
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AR 2011 PG 7 “Thanks to our liqui
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AR 2011 PG 9 Review of Operations I
Page 13 and 14: AR 2011 PG 11 proposals helped to p
Page 15 and 16: AR 2011 PG 13 reservoir description
Page 17 and 18: AR 2011 PG 15 Connacher Oil and Gas
Page 19 and 20: AR 2011 PG 17 the movement of wildl
Page 21 and 22: AR 2011 PG 19 MANAGEMENT’S DISCUS
Page 23 and 24: AR 2011 PG 21 reduced interest rate
Page 25 and 26: AR 2011 PG 23 Connacher’s bitumen
Page 27 and 28: AR 2011 PG 25 OPERATING COSTS (1) T
Page 29 and 30: AR 2011 PG 27 SALES PRODUCT MIX (%)
Page 31 and 32: AR 2011 PG 29 Depletion expense is
Page 33 and 34: AR 2011 PG 31 NEW NOTES We issued U
Page 35 and 36: AR 2011 PG 33 Compensation of key m
Page 37 and 38: AR 2011 PG 35 ACCOUNTING POLICIES A
Page 39 and 40: AR 2011 PG 37 The company classifie
Page 41 and 42: AR 2011 PG 39 Management is respons
Page 43 and 44: AR 2011 PG 41 The production outloo
Page 45 and 46: AR 2011 PG 43 QUARTERLY HIGHLIGHTS
Page 47 and 48: AR 2011 PG 45 Independent Auditor
Page 49 and 50: AR 2011 PG 47 Consolidated Statemen
Page 51 and 52: AR 2011 PG 49 Consolidated Statemen
Page 53 and 54: AR 2011 PG 51 Impairment of assets
Page 55 and 56: AR 2011 PG 53 Goodwill is allocated
Page 57 and 58: AR 2011 PG 55 3.11 Leases Agreement
Page 59 and 60: AR 2011 PG 57 IAS 1 Presentation of
Page 61 and 62: AR 2011 PG 59 Reconciliation of seg
Page 63: AR 2011 PG 61 8.1 Petroleum and nat
Page 67 and 68: AR 2011 PG 65 Accounts receivable a
Page 69 and 70: AR 2011 PG 67 December 31, 2010 - C
Page 71 and 72: AR 2011 PG 69 13.3 Refinancing of l
Page 73 and 74: AR 2011 PG 71 Changes in present va
Page 75 and 76: AR 2011 PG 73 The provision for inc
Page 77 and 78: AR 2011 PG 75 The following table s
Page 79 and 80: AR 2011 PG 77 19. FINANCE Charges F
Page 81 and 82: AR 2011 PG 79 Compensation of key m
Page 83 and 84: AR 2011 PG 81 Estimates Hindsight w
Page 85 and 86: AR 2011 PG 83 Reconciliation of Con
Page 87 and 88: AR 2011 PG 85 27.3 Asset and Liabil
Page 89 and 90: AR 2011 PG 87 The following table s
Page 91 and 92: CORPORATE INFORMATION Board of Dire
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