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Other Long-Term Liabilities | 12 Months Ended
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Dec. 31, 2021
Subclassifications of assets, liabilities and equities [abstract] |
Other Long-Term Liabilities | Other Long-Term Liabilities
|  | 2021 |  | 2020
Asset retirement obligations |  | $ | 6,806 |  |  | $ | 5,861 |
Lease liabilities (note 8) |  | 1,584 |  |  | 1,690 |
Share-based compensation |  | 489 |  |  | 160 |
Risk management (note 19) |  | 85 |  |  | 160 |
Transportation and processing contracts (1) |  | 241 |  |  | 270 |
Other (2) |  | 127 |  |  | 145 |
|  | 9,332 |  |  | 8,286 |
Less: current portion |  | 948 |  |  | 722 |
|  | $ | 8,384 |  |  | $ | 7,564 |
(1)The acquisition of Painted Pony in 2020 included product transportation and processing obligations (note 7). (2)Includes $48 million (2020 – $72 million) related to the acquisition of the Joslyn oil sands project in 2018, payable in annual installments of $25 million. 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 4.0% (2020 – 3.7%; 2019 – 3.8%) and inflation rates of up to 2% (December 31, 2020 – up to 2%). Reconciliations of the discounted asset retirement obligations were as follows:
|  | 2021 |  | 2020 |  | 2019
Balance – beginning of year |  | $ | 5,861 |  |  | $ | 5,771 |  |  | $ | 3,886 |
Liabilities incurred |  | 5 |  |  | 5 |  |  | 15 |
Liabilities acquired, net |  | 76 |  |  | 13 |  |  | 198 |
Liabilities settled |  | (307) |  |  | (249) |  |  | (296) |
Asset retirement obligation accretion |  | 185 |  |  | 205 |  |  | 190 |
Revision of cost and timing estimates |  | 1,716 |  |  | (134) |  |  | 412 |
Change in discount rates |  | (723) |  |  | 253 |  |  | 1,412 |
Foreign exchange adjustments |  | (7) |  |  | (3) |  |  | (46) |
Balance – end of year |  | 6,806 |  |  | 5,861 |  |  | 5,771 |
Less: current portion |  | 249 |  |  | 184 |  |  | 208 |
|  | $ | 6,557 |  |  | $ | 5,677 |  |  | $ | 5,563 |
Segmented Asset Retirement Obligations
|  | 2021 |  | 2020
Exploration and Production |  |  |  |
North America |  | $ | 4,021 |  |  | $ | 2,899 |
North Sea |  | 821 |  |  | 787 |
Offshore Africa |  | 170 |  |  | 174 |
Oil Sands Mining and Upgrading |  | 1,793 |  |  | 1,999 |
Midstream and Refining |  | 1 |  |  | 2 |
|  | $ | 6,806 |  |  | $ | 5,861 |
SHARE-BASED COMPENSATION The liability for share-based compensation includes costs incurred under the Company’s Option and PSU plans. 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. 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.
|  | 2021 |  | 2020 |  | 2019
Balance – beginning of year |  | $ | 160 |  |  | $ | 297 |  |  | $ | 124 |
Share-based compensation expense (recovery) |  | 514 |  |  | (82) |  |  | 223 |
Cash payment for stock options surrendered and PSUs vested |  | (48) |  |  | (39) |  |  | (2) |
Transferred to common shares |  | (139) |  |  | (21) |  |  | (53) |
Other |  | 2 |  |  | 5 |  |  | 5 |
Balance – end of year |  | 489 |  |  | 160 |  |  | 297 |
Less: current portion |  | 329 |  |  | 119 |  |  | 227 |
|  | $ | 160 |  |  | $ | 41 |  |  | $ | 70 |
Included within share-based compensation liability as at December 31, 2021 was $90 million (2020 – $49 million; 2019 – $62 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:
|  | 2021 |  | 2020 |  | 2019
Fair value |  | $ | 16.98 |  |  | $ | 3.47 |  |  | $ | 7.88 |
Share price |  | $ | 53.45 |  |  | $ | 30.59 |  |  | $ | 42.00 |
Expected volatility |  | 35.5% |  | 39.8% |  | 26.7%
Expected dividend yield |  | 4.4% |  | 5.6% |  | 3.6%
Risk free interest rate |  | 1.1% |  | 0.3% |  | 1.7%
Expected forfeiture rate |  | 4.7% |  | 4.3% |  | 4.3%
Expected stock option life (1) |  | 4.2 years |  | 4.3 years |  | 4.4 years
(1)At original time of grant. The intrinsic value of vested stock options at December 31, 2021 was $112 million (2020 – $11 million; 2019 – $75 million).

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