NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
 
NOTE 17 – IMPAIRMENT OF NON-CURRENT ASSETS 
 
At 31 December 2014, the Group reassessed the carrying amount of its non -current assets for indicators of 
impairment in accordance with the Group’s accounting policy.  D ue to the change in the oil pricing environment at 
year-end, the Company determined that there was  an indication of impairment  for development and production 
assets. 
 
Each of the Group’s development and production asset CGUs include all of its developed producing properties, 
shared infrastructure supporting its production and undeveloped acreage that the Group considers technically 
feasible and commercially viable. 
 
Estimates of recoverable amounts are based on the higher of an asset’s value -in-use or fair value less costs to sell 
(level 3 fair value hierarchy), using a discounted cash flow method, and are most sensitive to the key assumptions 
such as pricing, discount rates, and reserve risk factors. The Group has used the  FVLCS calculation whereby future 
cash flow s are based on estimates of hydrocarbon reserves in addition to other relevant factors such as value 
attributable to additional reserves based on production plans. 
 
Estimates of future commodity prices are based on the Group’s best estimates of future market prices with reference 
to external market analysts’ forecasts, current spot prices and forward curves.  At 31 December 2014, future NYMEX 
strip prices, adjusted for basis differentials, were applied in 2015 and gradually increased through 2016 to $75/bbl 
in 2017 and thereafter.  
The post-tax discount rate that has been applied to the above non-current assets was 8.0%.  The Group also applied 
further risk -adjustments appropriate for risks associated with its developed and undeveloped reserves using a 
weighted average risk -adjustment rate of 6% and 17%, respectively, based on the risk associate with each reserve 
category. 
 
Recoverable amounts and resulting impairment write-downs recognized in the Consolidated Statements of Profit or 
Loss and Other Comprehensive Income for the year ended 31 December 2014 are presented in the table below:  
 
  
Carrying costs (1) 
Recoverable 
amount 
 
Impairment 
Cash-generating unit US$’000 US$’000 US$’000 
    
Development and production assets:        
   Eagle Ford  400,761 389,764 10,997 
   Mississippian/Woodford     125,535       65,320      60,215 
Total development and production assets     526,296     455,084      71,212 
    
(1) Carrying costs exclude work-in-progress that is not subject to impairment analysis. 
 
  The impairment charge of $71.2 million noted above is primarily the result from the lower oil price environment.  
 
  
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