OTHER LONG-TERM LIABILITIES



	2018		2017
Asset retirement obligations	$	3,886	$	4,327
Share-based compensation	124		414
Risk management (note 19)	17		103
Deferred purchase consideration ^{(1) (2)}	118		469
Other	80		96
	4,225		5,409
Less: current portion	335		1,012
	$	3,890	$	4,397

(1) Includes $118 million of deferred purchase consideration at December 31, 2018, payable in annual installments of $25 million over the next five years.

(2) Includes $469 million (US$375 million) of deferred purchase consideration at December 31, 2017, paid 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 5.0% (2017 – 4.7%; 2016 – 5.2%) and inflation rates of up to 2% (December 31, 2017 - up to 2%). Reconciliations of the discounted asset retirement obligations were as follows:



	2018			2017			2016
Balance – beginning of year	$	4,327		$	3,243		$	2,950
Liabilities incurred	19			12			3
Liabilities acquired, net	6			784			30
Liabilities settled	(290		)	(274		)	(267		)
Asset retirement obligation accretion	186			164			142
Revision of cost, inflation rates and timing estimates	(111		)	(40		)	(68		)
Change in discount rate	(334		)	509			493
Foreign exchange adjustments	83			(71		)	(40		)
Balance – end of year	3,886			4,327			3,243
Less: current portion	186			92			95
	$	3,700		$	4,235		$	3,148

Segmented Asset Retirement Obligations



	2018		2017
Exploration and Production
North America	$	1,665	$	1,840
North Sea	707		755
Offshore Africa	134		245
Oil Sands Mining and Upgrading	1,379		1,486
Midstream	1		1
	$	3,886	$	4,327

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.



	2018			2017			2016
Balance – beginning of year	$	414		$	426		$	128
Share-based compensation (recovery) expense	(146		)	134			355
Cash payment for stock options surrendered	(5		)	(6		)	(7		)
Transferred to common shares	(120		)	(154		)	(117		)
(Recovered from) charged to Oil Sands Mining and Upgrading, net	(19		)	14			67
Balance – end of year	124			414			426
Less: current portion	92			348			368
	$	32		$	66		$	58

Included within share-based compensation liability as at December 31, 2018 was $13 million (2017 – $5 million; 2016 – $nil) related to performance share units 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:



	2018		2017		2016
Fair value	$	3.33	$	11.82	$	11.41
Share price	$	32.94	$	44.92	$	42.79
Expected volatility	27.4%		27.1%		30.7%
Expected dividend yield	4.1%		2.5%		2.3%
Risk free interest rate	1.9%		1.8%		0.9%
Expected forfeiture rate	4.2%		5.0%		5.0%
Expected stock option life ⁽¹⁾	4.4 years		4.5 years		4.6 years


(1)	At original time of grant.

The intrinsic value of vested stock options at December 31, 2018 was $27 million (2017 – $195 million; 2016 – $191 million).