Annual Report 2007 in PDF - Cairn Energy PLC

NOTES TO THE ACCOUNTS
CONTINUED
All exploration/appraisal assets were reviewed for indicators of impairment at the year end and, where indicators were found,
tested for impairment. Exploration/appraisal costs of $58.9m relating to Bangladesh and Nepalese assets were subsequently
impaired. See Note 5 for further details of the impairment review. Costs in Cairn India include $75m in relation to the Northern
Appraisal Area (‘NAA’) in Rajasthan. Cairn has sought to include the entire acreage within a development area submitted to the
GoI for approval. Should the GoI approve less than the full NAA, costs relating to acreage outside the approved development
area would be charged to the Income Statement. Costs relating to the NAA have been tested for impairment but are supported
by the headroom within the Cairn India cash-generating unit.
14. Property, Plant & Equipment – Development/Producing Assets
Cairn India Capricorn
Group Group Total
Group $’000 $’000 $’000
Cost
At 1 January 2006 417,379 229,187 646,566
Additions 97,975 12,482 110,457
Transfers between categories 1,566 – 1,566
––––––––––– ––––––––––– –––––––––––
At 1 January 2007 516,920 241,669 758,589
Additions 208,085 37,535 245,620
Transfers between categories 11,155 – 11,155
Disposals – (197,663) (197,663)
––––––––––– ––––––––––– –––––––––––
At 31 December 2007 736,160 81,541 817,701
––––––––––– ––––––––––– –––––––––––
Depletion and decommissioning
At 1 January 2006 130,816 58,821 189,637
Charge for the year 48,516 54,971 103,487
Impairment – 71,455 71,455
––––––––––– ––––––––––– –––––––––––
At 1 January 2007 179,332 185,247 364,579
Charge for the year 62,621 56,373 118,994
Reversal of impairment – (3,718) (3,718)
Disposals – (160,377) (160,377)
––––––––––– ––––––––––– –––––––––––
At 31 December 2007 241,953 77,525 319,478
––––––––––– ––––––––––– –––––––––––
Net book value at 31 December 2007 494,207 4,016 498,223
––––––––––– ––––––––––– –––––––––––
Net book value at 31 December 2006 337,588 56,422 394,010
––––––––––– ––––––––––– –––––––––––
Net book value at 1 January 2006 286,563 170,366 456,929
––––––––––– ––––––––––– –––––––––––
During the year, Cairn booked reserves in respect of the Lakshmi Oil field (2006: CB-X). As a consequence $11.2m (2006: $1.6m)
of costs were transferred from intangible exploration/appraisal assets (Note 13).
Included within additions during the year is an amount of $13.9m of borrowing costs (2006: $4.6m) capitalised at a rate of 17.3%
(2006: 6.3%).
The development assets were reviewed for indicators of impairment at the year end and the carrying value of the assets revised
where indicators of impairment or reversal of prior impairments were found. See Note 5 for further details of the impairment
review.
The disposal of assets in 2007 relates to the sale of Cairn Energy Bangladesh Limited to Santos International Holdings Pty
Limited. See Note 3 for details.
The net book value at 31 December 2007 includes $351.9m (2006: $198.0m) in respect of assets under construction which are
not yet subject to depletion.
CAIRN ENERGY PLC ANNUAL REPORT 2007 103