EXPLORATION AND EVALUATION ASSETS



	Exploration and Production								Oil Sands Mining and Upgrading			Total
	North America			North Sea		Offshore Africa
Cost
At December 31, 2016	$	2,306		$	—	$	76		$	—		$	2,382
Additions	144			—		15			—			159
Acquisition of AOSP and other assets (note 8)	31			—		—			259			290
Transfers to property, plant and equipment	(198		)	—		—			—			(198		)
Disposals/derecognitions	(1		)	—		—			—			(1		)
At December 31, 2017	2,282			—		91			259			2,632
Additions	245			—		35			222			502
Transfers to property, plant and equipment	(175		)	—		—			(222		)	(397		)
Disposals/derecognitions and other	(4		)	—		(89		)	(7		)	(100		)
At December 31, 2018	$	2,348		$	—	$	37		$	252		$	2,637

During the year ended December 31, 2018, the Company acquired a number of exploration and evaluation properties in the Oil Sands Mining and Upgrading and North America Exploration and Production segments.

In the Oil Sands Mining and Upgrading segment, the Company acquired the Joslyn oil sands project including exploration and evaluation assets of $222 million and associated asset retirement obligations of $4 million. Total consideration of $218 million was comprised of $100 million cash on closing with the remaining balance paid equally over each of the next five years. In the fourth quarter of 2018, following integration of the acquired assets into the Horizon mine plan and determination of proved crude oil reserves, the exploration and evaluation assets were transferred to property, plant and equipment. The above amounts are estimates, and may be subject to change based on the receipt of new information.

In the North America Exploration and Production segment, the Company acquired Laricina Energy Ltd., including exploration and evaluation assets of $118 million and property, plant and equipment of $44 million. In addition, the Company also acquired cash of $24 million and deferred income tax assets of $168 million and assumed net working capital liabilities of $18 million, asset retirement obligations of $17 million and notes payable of $48 million. Total purchase consideration was $46 million, resulting in a pre-tax gain of $225 million on the acquisition, representing the excess of the fair value of the net assets acquired compared to total purchase consideration. The Company settled the notes payable immediately following the completion of the acquisition. The transaction was accounted for using the acquisition method of accounting. The above amounts are estimates, and may be subject to change based on the receipt of new information.

The Company also completed two additional farm-out agreements in the Offshore Africa segment to dispose of a combined 30% interest in its exploration right in South Africa, comprised of exploration and evaluation assets of $89 million, including a recovery of $14 million of past incurred costs, for net proceeds of $105 million (US$79 million), resulting in a pre-tax gain of $16 million ($12 million after-tax). The Company retains a 20% working interest in the exploration right following the completion of these farm-out agreements.

Under the terms of the various agreements, in the event of a commercial crude oil discovery on the exploration right and conversion to a production right, additional cash payments of between US$623 million and US$645 million will be made to the Company. In the event of a commercial natural gas discovery on the exploration right and conversion to a production right, additional cash payments of between US$126 million and US$132 million will be made to the Company.

During 2017, the Company also disposed of a number of North America exploration and evaluation assets with a net book value of $1 million for consideration of $36 million, resulting in a pre-tax gain on sale of properties of $35 million.