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OTHER LONG-TERM LIABILITIES
 12 Months Ended
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).