NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
 
NOT E 1 - STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES continued  
 
b) Exploration and Evaluation Expenditure 
Exploration and evaluation expenditure s incurred are accumulated in respect of each identifiable area of interest.  
These costs are capitalised to the extent that they are expected to be recouped through the successful development 
of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the 
existence of economically recoverable reserves. Any such estimates and assumptions may change as new 
information becomes available.  If, after the expenditure is capitalized, informa tion becomes available suggesting 
that the recovery of the expenditure is unlikely, for example a dry hole, the relevant capitalized amount is written 
off in the consolidated statement of profit or loss and other comprehensive income in the period in which new 
information becomes available.  The costs of assets constructed within the Group includes the leasehold cost, 
geological and geophysical costs, and an appropriate proportion of fixed and variable overheads directly attributable 
to the exploration and acquisition of undeveloped oil and gas properties.  
 
When approval of commercial development of a discovered oil or gas field occurs , the accumulated costs for the 
relevant area of interest are transferred to development and production assets . The costs of developed and 
producing assets are amortised over the life of the area according to the rate of depletion of the proved and probable 
developed reserves.  The costs associated with the undeveloped acreage are not subject to depletion.  
 
The carrying amounts of the Group’s exploration and evaluation assets are reviewed at each reporting date, in 
conjunction with the impairment review process referred to in Note 1 (f), to determine whether any of impairment 
indicators exists.  Impairment indicators could include i) tenure over the licence area has expired during the period 
or will expire in the near future, and is not expected to be renewed, ii) substantive expenditure on further exploration 
for and evaluation of mineral resourc es in the specific area is not budgeted or planned, iii) exploration for and 
evaluation of resources in the specific area have not led to the discovery of commercially viable quantities of 
resources, and the Group has decided to discontinue activities in t he specific area, or iv) sufficient data exist to 
indicate that although a development is likely to proceed, the carrying amount of the exploration and evaluation 
asset is unlikely to be recovered in full from successful development or from sale.  Where an indicator of impairment 
exists, a formal estimate of the recoverable amount is made and any resulting impairment loss is recognized in the 
income statement. 
 
c) Development and Production Assets and Property and Equipment 
Development and production assets,  and property and equipment are carried at cost less, where applicable, any 
accumulated depreciation, amortisation and impairment losses. The costs of assets constructed within the Group 
includes the cost of materials, direct labor, borrowing costs and an ap propriate proportion of fixed and variable 
overheads directly attributable to the acquisition or development of oil and gas properties and facilities necessary 
for the extraction of resources. 
 
The carrying amount of development and production assets and property and equipment are reviewed at each 
reporting date to ensure that they are not in excess of the recoverable amount from these assets. Development and 
production assets are assessed for impairment on a cash-generating unit basis.  A cash-generating unit is the smallest 
grouping of assets that generates independent cash inflows.  Management has assessed its CGUs as being an