b'STAATSOLIE MAATSCHAPPIJ SURINAME N.V.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2019 (Continued)recognitioncriteriaforaprovisionaremet.Referto WhenprovedreservesofoilareidentifiedandSignificantaccountingjudgments,estimatesand developmentissanctionedbymanagement,theassumptions(Section2.4)andProvisions(Section relevantcapitalizedexpenditureisfirstassessed4.8)forfurtherinformationabouttherecognized forimpairmentand(ifrequired)anyimpairmentdecommissioningprovision. lossisrecognized,thentheremainingbalanceisLandandbuildingsaremeasuredathistorical transferred to oil properties. cost,lessaccumulateddepreciationonbuildings, Otherthanlicensecosts,noamortizationischargedandimpairmentlossesifany,arerecognizedatthe duringtheexplorationandevaluationphase.dateofrevaluation.Oil propertiesExploration and evaluation assetsThecostsofproductiondevelopmentsuchasExplorationandevaluationactivityinvolve drilling,testingandcompletionofdevelopmentthesearchforhydrocarbonresources,the wellsarecapitalized,notwithstandingifthesewellsdetermination of technical feasibility and thearesuccessfulornot.Capitalizedcostsconsistassessmentofcommercialviabilityofanidentified ofthepurchasepriceofmaterialsandservices,resource. includingtheGroupsinternalservices.CapitalizedOncethelegalrighttoexplorehasbeenacquired, costsforwells,equipmentandproductionfacilitiescostsdirectlyassociatedwithanexplorationwell are depreciated using the units of production arecapitalizedasexplorationandevaluation (UOP)method.projectsinprogressuntilthedrillingofthewellis Allcostsfordevelopmentwells,relatedplantcompleteandtheresultshavebeenevaluated. andequipment,andrelatedAssetRetirementThesecostsincludedirectlyattributableemployee Obligation(ARO)arecapitalized.Capitalizedcostsremuneration,materialsandfuelused,rigcostsand relatingtoinvestmentsintheoilfield,includingpayments made to contractors. productivelandproperties,aredepreciatedbasedontheUOPmethod,generallybyindividualfield,Geologicalandgeophysicalcostsarerecognized astheproveddevelopedreservesareproduced.intheconsolidatedstatementofprofitorloss,as TheUOPfactorisderivedfromtheyearoilincurred. productionandtherelatedproveddevelopedoilreserves.If no potentially commercial hydrocarbons areOil propertiesassets under constructiondiscovered,theexplorationassetiswrittenoffthroughtheconsolidatedstatementofprofitorloss ExpenditureistransferredfromExplorationandas a dry hole.evaluationassetstoAssetsunderconstructionIfextractablehydrocarbonsarefoundand,subject whichisasubcategoryofOilandgaspropertiestofurtherappraisalactivity(e.g.thedrillingof oncetheworkcompletedtodatesupportsadditionalwells),itisprobablethattheycanbe thefuturedevelopmentoftheassetandsuchcommerciallydeveloped,thecostscontinueto developmentreceivesappropriateapprovals.Afterbecarriedasprojectsinprogresswhilesufficient/ transferoftheexplorationandevaluationassets,continued progress is made in assessing theallsubsequentexpenditureontheconstruction,commerciality of the hydrocarbons. installation or completion of infrastructure facilities suchaspipelinesandthedrillingofdevelopmentCostsdirectlyassociatedwithappraisalactivity wells,includingunsuccessfuldevelopmentundertakentodeterminethesize,characteristics ordelineationwells,iscapitalizedwithinoilandcommercialpotentialofareservoirfollowing properties.theinitialdiscoveryofhydrocarbons,includingthe Developmentexpenditureisnetofproceedsfromcostsofappraisalwellswherehydrocarbonswere thesaleofoilproducedduringthedevelopmentnotfound,areinitiallycapitalizedasprojectsin phase to the extent that it is considered integral to progress. thedevelopmentoftheasset.AnycostsincurredAllsuchcapitalizedcostsaresubjecttotechnical, intestingtheassetstodeterminewhethertheycommercialandmanagementreview,aswellas arefunctioningasintended,arecapitalized,reviewforindicatorsofimpairmentatleastonce netofanyproceedsreceivedfromsellinganyayear.Thisistoconfirmthecontinuedintent productproducedwhiletesting.Wherethesetodeveloporotherwiseextractvaluefromthe proceedsexceedthecostoftesting,anyexcessisdiscovery.Whenthisisnolongerthecase,the recognizedintheconsolidatedstatementofprofitcostsarewrittenoffthroughtheconsolidated or loss.statementofprofitorloss.47'