Notes
44+45
01 Accounting policies The annual accounts have been prepared in accordance with the Norwegian Accounting Act and Norwegian generally accepted accounting principles.
Revenues. The sale of crude oil and gas is recognized at the point of delivery. For crude oil the point of delivery is at the offshore loading point or at shipment from terminal. Point of delivery for gas is at the gas receiving terminal onshore.
02 Financial market risk Assets liabilities and expenses related to participating interests in exploration and production licenses (joint ventures). The company’s participating interests in exploration and production licenses on the Norwegian Continental Shelf are accounted for in the income statement and the balance sheet in accordance with the proportional consolidation method.
The company’s financial result is affected by fluctuations in crude oil and gas prices and foreign currency exchange rates (mostly USD and EURO). The company’s loans are stated in NOK with floating interest rate. Consequently, the company will be affected also by changes in the interest rate market.
03 Bank deposits
Spare parts and drilling equipment. Spare parts and Expenses. Expenses are expensed as incurred in accordance with the matching principle; either along with the revenues they have generated or identified as a periodical expense.
drilling equipment are valued at the lower of cost or market value. Cost is estimated using the FIFO method.
NOK 6 195 921,17 of total bank deposits are restricted funds relating to withheld taxes. The company has an unused cash credit on NOK 15 000 000.
Over-/under lift and petroleum in stock. Obligations arising Estimates. In accordance with Norwegian generally accepted accounting principles, the management of the company is responsible for the estimates and assumptions that affect the valuation of assets and liabilities in the balance sheet and depreciations in the profit and loss statement. The final realizable values may deviate from these estimates.
as a result of lifted quantities of crude oil that are larger than the company’s participating interests in a license, are valued at production cost. Receivables arising as a result of lifted quantities of crude oil that are less than the company’s share in a license, are valued at the lower of production cost and sales price. Petroleum in stock which has not passed the Norm Price-point, is valued to production cost.
Classification and assessment of items in the balance sheet. Current assets and short-term liabilities include items due within one year and items related to ordinary working capital. All other items are classified as fixed assets/long-term debt. Current assets are valued at the lower of cost and fair value. Short-term debt is valued at the historical nominal value. Fixed assets are valued at cost, but written down to fair value if the decline in value is not expected to be temporary. Long-term debt is stated at the historical nominal value.
Foreign currency. Monetary balance sheet items in foreign currency are converted at the exchange rate on the closing balance date. All foreign currency transactions are recorded in NOK on the basis of the company’s monthly book-keeping currency exchange rates, which approximate market rates.
Exploration costs. Cost regarding geological studies and analysis are expensed as incurred. Exploration drilling costs are temporarily capitalized until new potential oil and gas reserves have been evaluated (the successful efforts method). When new reserves are discovered and fully developed and put into production, the exploration drilling costs will be depreciated based on the-unit-of-production method. Drilling costs related to dry holes are expensed.
Development costs. Costs including interest on building loan related to the development of commercial oil or gas fields are capitalized as a part of the installations. Capital expenditures on fields in production are capitalized based on information from the operator. Depreciation of oil and gas production facilities is calculated in accordance with the unit-of-production method. In accordance with this method the annual depreciation will be determined based on the relationship between the annual production and the estimated total oil and gas reserves that can be recovered with the existing production facilities in use. Depreciation of onshore equipment is calculated in accordance with the straight-line method.
Accounts receivables. Trade accounts receivables and other receivables are recorded at face value reduced by a provision for anticipated losses. Asset retirement obligation. When the retirement obligation has incurred, the liability amount is recognized as a long term provision and the same amount is capitalized as part of the producing asset. The asset cost is expensed through depreciations over the remaining useful life of the asset. The future changes in asset retirement obligation estimates are capitalized as part of the asset and charged to profit and loss prospectively over the remaining useful life of the asset.
Tax expense. Tax expense reflects both taxes on current taxable income and change in deferred income taxes. Deferred tax is calculated based on net temporary differences between the book and tax values at year end. The calculation has taken into account tax loss carry forward and uplift. The current tax rate has been used in the calculation of the deferred tax expense. The uplift reduces the special petroleum tax. Earned uplift from capitalized expenditures have been fully reflected in the tax calculation.
Pensions. Accounting for pensions is based on a linear vested principle and on expected wages at the point of retirement. Changes in pension schemes are amortized over the remaining vesting period. Estimate deviations are continuously charged to equity. Social security tax is included in the pension cost and liabilities. Cash flow statement. The cash flow statement is presented using the indirect method. Cash and cash equivalents include bank deposits.
Leasing. GDF SUEZ E&P Norge AS has only operational leasing contracts. The cost is continuously charged to the profit and loss.
04 Operating revenues The company’s production has been sold as follows: NOK 1 000
Norway
France
England
Sum 2008
Sum 2007 1 519 830
Crude oil
0
0
2 272 568
2 272 568
NGL
428 956
0
0
428 956
9 391
GAS
0
1 336 041
0
1 336 041
42 307
Condensate
155 414
0
0
155 414
40 815
Total
584 370
1 336 041
2 272 568
4 192 979
1 612 343
05 Salaries and fees 2008
2007
Salaries
97 081 615
48 378 145
Recharged salaries
88 944 314
33 060 269
Social security tax
13 620 311
6 770 111
Pension costs
12 171 640
7 760 823
Other employee benefits
18 590 084
6 498 686
Total
52 519 336
36 347 496
105
63
Man year at year end
The Managing Director received in 2008 NOK 3 257 015 in salary, bonus and other benefits. The Managing Director is entitled to resign at the age of 64 years with a pension of 66 % of full salary. In 2008 remuneration to the Board was NOK 140 000. Audit fees in 2008 totaled NOK 1 313 000 excl. VAT. Other services from auditors total NOK 789 860 excl. VAT. Such other services include assistance with the tax return preparation and correspondence with the Norwegian Oil Taxation Office.