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Other Long-Term Liabilities
 12 Months Ended
Dec. 31, 2020
Subclassifications of assets, liabilities and equities [abstract]  
Other Long-Term Liabilities Other Long-Term Liabilities
 
2020

2019
Asset retirement obligations
$5,861 

$5,771 
Lease liabilities (note 8) (1)
1,690 1,809 
Share-based compensation
160 297 
Risk management (note 19)
160 

112 
Deferred purchase consideration (2)
72 

95 
Other (3)
343 

98 
 
8,286 8,182 
Less: current portion
722 

819 
 
$7,564 $7,363 
(1)The acquisition of Painted Pony in 2020 included lease liabilities of $93 million (note 7).
(2)Relates to the acquisition of the Joslyn oil sands project in 2018, payable in annual installments of $25 million over the next three years.
(3)The acquisition of Painted Pony in 2020 included product transportation and processing obligations valued at $268 million (note 7).
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 discounted using a weighted average discount rate of 3.7% (2019 – 3.8%; 2018 – 5.0%) and inflation rates of up to 2% (December 31, 2019 – up to 2%). Reconciliations of the discounted asset retirement obligations were as follows:
 202020192018
Balance – beginning of year
$5,771 

$3,886 

$4,327 
Liabilities incurred
5 

15 

19 
Liabilities acquired, net
13 

198 

6 
Liabilities settled
(249)

(296)

(290)
Asset retirement obligation accretion
205 

190 

186 
Revision of cost and timing estimates
(134)

412 

(111)
Change in discount rates
253 

1,412 

(334)
Foreign exchange adjustments
(3)

(46)

83 
Balance – end of year
5,861 5,771 3,886 
Less: current portion
184 

208 

186 
 
$5,677 $5,563 $3,700 
Segmented Asset Retirement Obligations
 
2020

2019
Exploration and Production
 

 
North America
$2,899 

$2,792 
North Sea
787 

816 
Offshore Africa
174 

161 
Oil Sands Mining and Upgrading
1,999 

2,000 
Midstream and Refining
2 

2 
 
$5,861 $5,771 
SHARE-BASED COMPENSATION
The liability for share-based compensation includes costs incurred under the Company’s Stock Option Plan and PSU plans. The Company’s Stock Option Plan provides current employees with the right to elect to receive common shares or a cash payment in exchange for stock options surrendered. The PSU plan provides certain executive employees of the Company with the right to receive a cash payment, the amount of which is determined by individual employee performance and the extent to which certain other performance measures are met.
The Company recognizes a liability for potential cash settlements under these plans. The current portion of the liability represents the maximum amount of the liability payable within the next twelve month period if all vested stock options and PSUs are settled in cash.
 
202020192018
Balance – beginning of year
$297 $124 $414 
Share-based compensation (recovery) expense
(82)223 (146)
Cash payment for stock options surrendered and PSUs vested
(39)(2)(5)
Transferred to common shares
(21)(53)(120)
Charged to (recovered from) Oil Sands Mining and
Upgrading, net
5 5 (19)
Balance – end of year
160 297 124 
Less: current portion
119 227 92 
 
$41 $70 $32 
Included within share-based compensation liability as at December 31, 2020 was $49 million (2019 – $62 million; 2018 – $13 million) 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:
 
202020192018
Fair value
$3.47 $7.88 $3.33 
Share price
$30.59 $42.00 $32.94 
Expected volatility
39.8%26.7%27.4%
Expected dividend yield
5.6%3.6%4.1%
Risk free interest rate
0.3%1.7%1.9%
Expected forfeiture rate
4.3%4.3%4.2%
Expected stock option life (1)
4.3 years
4.4 years
4.4 years
(1)At original time of grant.
The intrinsic value of vested stock options at December 31, 2020 was $11 million (2019 – $75 million; 2018 – $27 million).