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Other Long-Term Liabilities
 12 Months Ended
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:
 202120202019
Balance – beginning of year
$5,861 

$5,771 

$3,886 
Liabilities incurred
5 

5 

15 
Liabilities acquired, net76 

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.
 
202120202019
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:
 
202120202019
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).