b'STAATSOLIE MAATSCHAPPIJ SURINAME N.V.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2019 (Continued)Ateveryreportingdatethehistoricalobserved Recoverability of assets defaultratewillbeupdatedandchangesintheforward-lookingestimateswillbeanalyzed. TheGroupassesseseachassetorcashgeneratingunit(CGU)(excludinggoodwill,whichDecommissioning liability is assessed annually regardless of indicators) Decommissioningcostswillbeincurredbythe ineachreportingperiodtodeterminewhetherGroup at the end of the operating life of some ofanyindicationofimpairmentexists.WhereantheGroupsfacilitiesandproperties.TheGroup indicatorofimpairmentexists,aformalestimateassessesitsdecommissioningprovisionateach oftherecoverableamountismade,whichisreportingdate.Theultimatedecommissioning consideredtobethehigherofthefairvaluecostsareuncertainandcostestimatescanvary lesscostofdisposal(FVLCD)andvalue-in-inresponsetomanyfactors,includingchanges use(VIU).Theassessmentsrequiretheuseoftorelevantlegalrequirements,estimatesofthe estimates and assumptions such as long-term oil extentandcostsofdecommissioningactivities, prices(consideringcurrentandhistoricalprices,theemergenceofnewrestorationtechniquesor pricetrendsandrelatedfactors),discountrates,experienceatotherproductionsites,costincreases operatingcosts,futurecapitalrequirements,ascomparedtotheinflationratesof2.34%(2018: decommissioningcosts,explorationpotential,2.5%),andchangesindiscountratesof7.82% reservesandoperatingperformance(which(2018:10.28%).Theexpectedtiming,extent includesproductionandsalesvolumes).Theseandamountofexpendituremayalsochange,for estimatesandassumptionsaresubjecttoriskexample,inresponsetochangesinoilandgas anduncertainty.Therefore,thereisapossibilityreservesorchangesinlawsandregulationsor thatchangesincircumstanceswillimpactthesetheirinterpretation.Therefore,significantestimates projections,whichmayimpacttherecoverableand assumptions are made in determining theamountofassetsand/orCGUs.provisionfordecommissioning.Asaresult,there Units of production (UOP) depreciationcouldbesignificantadjustmentstotheprovisions of oil assets establishedwhichwouldaffectfuturefinancialresults.Theprovisionatreportingdaterepresents OilpropertiesaredepreciatedusingUOPmethodmanagementsbestestimateofthepresentvalue overtotalproveddevelopedandundevelopedofthefuturedecommissioningcostsrequired. hydrocarbonreserves.Thisresultsinadepreciation/amortizationchargeproportionaltotheEnvironmental risk liability depletion of the anticipated remaining production Liabilitiesforenvironmentalcostsarerecognized fromthefield.whenaclean-upisprobable,andtheassociated Thelifeofeachitem,whichisassessedatleastcostscanbereliablyestimated.Generally,the annually,relatestobothitsphysicallifelimitationstimingofrecognitionoftheseprovisionscoincides and present assessments of economically withthecommitmenttoaformalplanofactionor,if recoverablereservesofthefieldatwhichtheearlier,ondivestmentoronclosureofinactivesites. assetislocated.ThesecalculationsrequiretheTheamountrecognizedisthebestestimateofthe useofestimatesandassumptions,includingtheexpenditurerequired.Iftheeffectofthetimevalue amountofrecoverablereservesandestimatesofmoneyismaterial,theamountrecognizedisthe offuturecapitalexpenditure.Thecalculationofpresentvalueoftheestimatedfutureexpenditure. theUOPrateofdepreciation/amortizationwillbeimpacted to the extent that actual production in the Contingent liabilities future is different from current forecast production Contingent liabilities may arise from the ordinarybasedontotalprovedreserves,orfuturecapitalcourse of business in relation to claims againstexpenditureestimateschange.ChangestoprovetheGroup,includinglegal,contractualandother reservescouldariseduetochangesinthefactorsclaims.Bytheirnature,contingencieswillbe orassumptionsusedinestimatingreserves,resolvedonlywhenoneormoreuncertainfuture including:eventsoccurorfailtooccur.Theassessmentofthe Theeffectonprovedreservesofdifferencesexistence,andpotentialquantum,ofcontingencies inherentlyinvolvestheexerciseofsignificant betweenactualcommoditypricesandcommodityjudgmentandtheuseofestimatesregardingthe price assumptionsoutcomeoffutureevents.Unforeseen operational issues 57'