BP 2014 Annual Report Download - page 128

6. Exploration for and evaluation of oil and natural gas resources
The following financial information represents the amounts included within the group totals relating to activity associated with the exploration for and
evaluation of oil and natural gas resources. All such activity is recorded within the Upstream segment.
For information on significant estimates and judgements made in relation to oil and natural gas accounting see Intangible assets within Note 1.
$ million
2014 2013 2012
Exploration and evaluation costs
Exploration expenditure written offa3,029 2,710 745
Other exploration costs 603 731 730
Exploration expense for the year 3,632 3,441 1,475
Impairment losses –253 –
Impairment reversals –– (42)
Intangible assets – exploration and appraisal expenditure 19,344 20,865 23,434
Liabilities 227 212 287
Net assets 19,117 20,653 23,147
Capital expenditure 2,870 4,464 5,176
Net cash used in operating activities 603 731 730
Net cash used in investing activities 2,786 4,275 5,010
a2014 included a $544-million write-off relating to disappointing appraisal results of Utica shale in the US Lower 48 and the subsequent decision not to proceed with its development plans, a $524-million
write-off relating to the Bourarhat Sud block licence in the Illizi Basin of Algeria, a $395-million write-off relating to Block KG D6 in India and a $295-million write-off relating to the Moccasin discovery in
the deepwater Gulf of Mexico. 2013 included a $845-million write-off relating to the value ascribed to Block BM-CAL-13 offshore Brazil as a result of the Pitanga exploration well not encountering
commercial quantities of oil and gas and a $257-million write-off of costs relating to the Risha concession in Jordan as our exploration activities did not establish the technical basis for a development
project in the concession. For further information see Upstream – Exploration on page 26.
The carrying amount, by location, of exploration and appraisal expenditure capitalized as intangible assets at 31 December 2014 is shown in the table
below.
Carrying amount Location
$1-2 billion Angola; India
$2-3 billion Canada; Egypt; Brazil
$4-5 billion US – Gulf of Mexico
7. Taxation
Tax on profit
$ million
2014 2013 2012
Current tax
Charge for the year 4,444 5,724 6,664
Adjustment in respect of prior years 48 61 252
4,492 5,785 6,916
Deferred tax
Origination and reversal of temporary differences in the current year (3,194) 529 67
Adjustment in respect of prior years (351) 149 (103)
(3,545) 678 (36)
Tax charge on profit 947 6,463 6,880
In 2014, the total tax credit recognized within other comprehensive income was $1,481 million (2013 $1,374 million charge and 2012 $270 million
credit). See Note 30 for further information. The total tax charge recognized directly in equity was $36 million (2013 $33 million credit and 2012
$6 million credit).
For information on significant estimates and judgements made in relation to taxation see Income taxes within Note 1.
Reconciliation of the effective tax rate
The following table provides a reconciliation of the UK statutory corporation tax rate to the effective tax rate of the group on profit before taxation.
With effect from 1 April 2014 the UK statutory corporation tax rate reduced from 23% to 21% on profits arising from activities outside the North Sea.
For 2014, the items presented in the reconciliation are distorted as a result of the tax credits related to the impairment losses recognized in the year,
and the effect of the impairment losses on the profit for the year. In order to provide a more meaningful analysis of the effective tax rate for 2014,
the table also presents separate reconciliations for the group excluding the effects of the impairment losses, and for the effects of the impairment
losses in isolation. For 2013 and 2012, the effective tax rate is not affected significantly by impairment losses. See Note 3 for further information.
124 BP Annual Report and Form 20-F 2014