b'STAATSOLIE MAATSCHAPPIJ SURINAME N.V.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2018 (Continued)incurred.Thepresentvalueoftheexpectedcost discovery.Whenthisisnolongerthecase,theforthedecommissioningoftheassetafteritsuse, costs are written off through the consolidated is included in the cost of the respective asset if thestatementofprofitorloss.recognition criteria for a provision are met. Refer toSignificantaccountingjudgments,estimates Whenprovedreservesofoilareidentifiedandand assumptions (Note 2.4) and Provisions (Notedevelopmentissanctionedbymanagement,the4.7)forfurtherinformationabouttherecognized relevantcapitalizedexpenditureisfirstassesseddecommissioning provision. forimpairmentand(ifrequired)anyimpairmentlossisrecognized,thentheremainingbalanceisLand and buildings are measured at historicaltransferred to oil properties. cost,lessaccumulateddepreciationonbuildings,andimpairmentlossesarerecognizedatthedate Otherthanlicensecosts,noamortizationischargedof revaluation.during the exploration and evaluation phase.Exploration and evaluation assets Oil propertiesExploration and evaluation activity involveThecostsofproductiondevelopmentsuchasthesearchforhydrocarbonresources,the drilling,testingandcompletionofdevelopmentdetermination of technical feasibility and thewellsarecapitalized,notwithstandingifthesewellsassessment of commercial viability of anaresuccessfulornot.Capitalizedcostsconsistidentifiedresource. ofthepurchasepriceofmaterialsandservices,includingtheGroupsinternalservices.CapitalizedOncethelegalrighttoexplorehasbeenacquired, costsforwells,equipmentandproductionfacilitiescosts directly associated with an exploration wellare depreciated using the units of production arecapitalizedasexplorationandevaluation (UOP) method.projectsinprogressuntilthedrillingofthewelliscomplete and the results have been evaluated.Allcostsfordevelopmentwells,relatedplantandequipment,andrelatedAssetRetirementThesecostsincludedirectlyattributableemployee Obligation(ARO)arecapitalized.Capitalizedcostsremuneration,materialsandfuelused,rigcosts relatingtoinvestmentsintheoilfield,includingand payments made to contractors. productivelandproperties,aredepreciatedbasedGeologicalandgeophysicalcostsarerecognized ontheUOPmethod,generallybyindividualfield,intheconsolidatedstatementofprofitorloss,as as the proved developed reserves are produced. incurred. TheUOPfactorisderivedfromtheyearoilproduction and the related proved developed oil If no potentially commercial hydrocarbons arereserves.discovered,theexplorationassetiswrittenoff Oil propertiesassets under constructionthroughthestatementofprofitasadryhole.Ifextractablehydrocarbonsarefoundand,subject ExpenditureistransferredfromExplorationandto further appraisal activity (e.g. the drilling ofevaluationassetstoAssetsunderconstructionadditionalwells),itisprobablethattheycanbe whichisasubcategoryofOilandgaspropertiescommerciallydeveloped,thecostscontinueto once the work completed to date supports becarriedasprojectsinprogresswhilesufficient/ the future development of the asset and such continued progress is made in assessing thedevelopment receives appropriate approvals. After commerciality of the hydrocarbons. transferoftheexplorationandevaluationassets,allsubsequentexpenditureontheconstruction,Costs directly associated with appraisal activityinstallation or completion of infrastructure facilities undertakentodeterminethesize,characteristics such as pipelines and the drilling of development and commercial potential of a reservoir followingwells,includingunsuccessfuldevelopmenttheinitialdiscoveryofhydrocarbons,includingthe ordelineationwells,iscapitalizedwithinoilcosts of appraisal wells where hydrocarbons wereproperties.notfound,areinitiallycapitalizedasprojectsin Development expenditure is net of proceeds from progress. the sale of oil produced during the development Allsuchcapitalizedcostsaresubjecttotechnical, phase to the extent that it is considered integral to commercialandmanagementreview,aswellas the development of the asset. Any costs incurred review for indicators of impairment at least oncein testing the assets to determine whether they ayear.Thisistoconfirmthecontinuedintent arefunctioningasintended,arecapitalized,to develop or otherwise extract value from thenet of any proceeds received from selling any 41'