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OTHER LONG-TERM LIABILITIES | 12 Months Ended
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Dec. 31, 2017
Subclassifications of assets, liabilities and equities [abstract] |
OTHER LONG-TERM LIABILITIES | OTHER LONG-TERM LIABILITIES
|  | 2017 |  |  | 2016 |
Asset retirement obligations |  | $ | 4,327 |  |  | $ | 3,243 |
Share-based compensation |  | 414 |  |  | 426 |
Risk management (note 18) |  | 103 |  |  | — |
Other (1) |  | 565 |  |  | 17 |
|  | 5,409 |  |  | 3,686 |
Less: current portion |  | 1,012 |  |  | 463 |
|  | $ | 4,397 |  |  | $ | 3,223 |
(1) Included in Other at December 31, 2017 is $469 million (US$375 million) of deferred purchase consideration payable to Marathon in March 2018. Asset Retirement Obligations The Company’s asset retirement obligations are expected to be settled on an ongoing basis over a period of approximately 60 years and have been discounted using a weighted average discount rate of 4.7% (2016 – 5.2%; 2015 – 5.9%). Reconciliations of the discounted asset retirement obligations were as follows:
|  | 2017 |  |  | 2016 |  |  | 2015 |
Balance – beginning of year |  | $ | 3,243 |  |  | $ | 2,950 |  |  | $ | 4,221 |
Liabilities incurred |  | 12 |  |  | 3 |  |  | 7 |
Liabilities acquired, net |  | 784 |  |  | 30 |  |  | 129 |
Liabilities settled |  | (274 | ) |  | (267 | ) |  | (370 | )
Asset retirement obligation accretion |  | 164 |  |  | 142 |  |  | 173 |
Revision of cost, inflation rates and timing estimates |  | (40 | ) |  | (68 | ) |  | (313 | )
Change in discount rate |  | 509 |  |  | 493 |  |  | (1,150 | )
Foreign exchange adjustments |  | (71 | ) |  | (40 | ) |  | 253 |
Balance – end of year |  | 4,327 |  |  | 3,243 |  |  | 2,950 |
Less: current portion |  | 92 |  |  | 95 |  |  | 101 |
|  | $ | 4,235 |  |  | $ | 3,148 |  |  | $ | 2,849 |
Segmented Asset Retirement Obligations
|  | 2017 |  |  | 2016 |
Exploration and Production |  |  |  |
North America |  | $ | 1,840 |  |  | $ | 1,444 |
North Sea |  | 755 |  |  | 837 |
Offshore Africa |  | 245 |  |  | 244 |
Oil Sands Mining and Upgrading |  | 1,486 |  |  | 717 |
Midstream |  | 1 |  |  | 1 |
|  | $ | 4,327 |  |  | $ | 3,243 |
Share-Based Compensation As the Company’s Option Plan provides current employees with the right to elect to receive common shares or a cash payment in exchange for stock options surrendered, a liability for potential cash settlements is recognized. The current portion represents the maximum amount of the liability payable within the next twelve month period if all vested stock options are surrendered for cash settlement.
|  | 2017 |  |  | 2016 |  |  | 2015 |
Balance – beginning of year |  | $ | 426 |  |  | $ | 128 |  |  | $ | 203 |
Share-based compensation expense (recovery) |  | 134 |  |  | 355 |  |  | (46 | )
Cash payment for stock options surrendered |  | (6 | ) |  | (7 | ) |  | (1 | )
Transferred to common shares |  | (154 | ) |  | (117 | ) |  | (18 | )
Charged to (recovered from) Oil Sands Mining and Upgrading, net |  | 14 |  |  | 67 |  |  | (10 | )
Balance – end of year |  | 414 |  |  | 426 |  |  | 128 |
Less: current portion |  | 348 |  |  | 368 |  |  | 105 |
|  | $ | 66 |  |  | $ | 58 |  |  | $ | 23 |
Included within share-based compensation expense for the year ended December 31, 2017 was $5 million (2016 – $nil; 2015 – $nil) related to PSUs granted to certain executive employees. The fair value of stock options outstanding was estimated using the Black-Scholes valuation model with the following weighted average assumptions:
|  | 2017 |  |  | 2016 |  |  | 2015 |
Fair value |  | $ | 11.82 |  |  | $ | 11.41 |  |  | $ | 3.06 |
Share price |  | $ | 44.92 |  |  | $ | 42.79 |  |  | $ | 30.22 |
Expected volatility |  | 27.1% |  |  | 30.7% |  |  | 28.6% |
Expected dividend yield |  | 2.5% |  |  | 2.3% |  |  | 3.0% |
Risk free interest rate |  | 1.8% |  |  | 0.9% |  |  | 0.6% |
Expected forfeiture rate |  | 5.0% |  |  | 5.0% |  |  | 4.8% |
Expected stock option life (1) |  | 4.5 years |  |  | 4.6 years |  |  | 4.5 years |
(1) | At original time of grant.
The intrinsic value of vested stock options at December 31, 2017 was $195 million (2016 – $191 million; 2015 – $10 million).

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