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Business segments | 12 Months Ended
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Dec. 31, 2013
Business segments | 2. Business segments The company operates its business in Canada. The Upstream, Downstream and Chemical functions best define the operating segments of the business that are reported separately. The factors used to identify these reportable segments are based on the nature of the operations that are undertaken by each segment and the structure of the company’s internal organization. The Upstream segment is organized and operates to explore for and ultimately produce crude oil and its equivalent, and natural gas. The Downstream segment is organized and operates to refine crude oil into petroleum products and the distribution and marketing of these products. The Chemical segment is organized and operates to manufacture and market hydrocarbon-based chemicals and chemical products. The above segmentation has been the long-standing practice of the company and is broadly understood across the petroleum and petrochemical industries. These functions have been defined as the operating segments of the company because they are the segments (a) that engage in business activities from which revenues are earned and expenses are incurred; (b) whose operating results are regularly reviewed by the company’s chief operating decision maker to make decisions about resources to be allocated to each segment and assess its performance; and (c) for which discrete financial information is available. Corporate and Other includes assets and liabilities that do not specifically relate to business segments – primarily cash, capitalized interest costs, short-term borrowings, long-term debt and liabilities associated with incentive compensation and post-retirement benefits liability adjustment. Net income in this segment primarily includes debt-related financing costs, interest income and share-based incentive compensation expenses. Segment accounting policies are the same as those described in the summary of significant accounting policies. Upstream, Downstream and Chemical expenses include amounts allocated from the Corporate and Other segment. The allocation is based on a combination of fee for service, proportional segment expenses and a three-year average of capital expenditures. Transfers of assets between segments are recorded at book amounts. Intersegment sales are made essentially at prevailing market prices. Assets and liabilities that are not identifiable by segment are allocated.
|  | Upstream |  |  | Downstream |  |  | Chemical |
millions of dollars |  | 2013 |  |  | 2012 |  |  | 2011 |  |  | 2013 |  |  | 2012 |  |  | 2011 |  |  | 2013 |  |  | 2012 |  |  | 2011 |
Revenues and other income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operating revenues (a) |  |  | 6,016 |  |  |  | 4,674 |  |  |  | 5,278 |  |  |  | 25,450 |  |  |  | 25,077 |  |  |  | 23,909 |  |  |  | 1,256 |  |  |  | 1,302 |  |  |  | 1,287 |
Intersegment sales |  |  | 4,026 |  |  |  | 4,110 |  |  |  | 4,460 |  |  |  | 1,978 |  |  |  | 2,603 |  |  |  | 2,784 |  |  |  | 318 |  |  |  | 299 |  |  |  | 354 |
Investment and other income |  |  | 145 |  |  |  | 46 |  |  |  | 168 |  |  |  | 59 |  |  |  | 81 |  |  |  | 63 |  |  |  | - |  |  |  | - |  |  |  | - |
|  |  | 10,187 |  |  |  | 8,830 |  |  |  | 9,906 |  |  |  | 27,487 |  |  |  | 27,761 |  |  |  | 26,756 |  |  |  | 1,574 |  |  |  | 1,601 |  |  |  | 1,641 |
Expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Exploration |  |  | 123 |  |  |  | 83 |  |  |  | 92 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Purchases of crude oil and products |  |  | 3,778 |  |  |  | 3,056 |  |  |  | 3,581 |  |  |  | 21,628 |  |  |  | 21,316 |  |  |  | 21,642 |  |  |  | 1,065 |  |  |  | 1,115 |  |  |  | 1,222 |
Production and manufacturing (b) |  |  | 3,389 |  |  |  | 2,704 |  |  |  | 2,484 |  |  |  | 1,695 |  |  |  | 1,569 |  |  |  | 1,451 |  |  |  | 210 |  |  |  | 185 |  |  |  | 179 |
Selling and general |  |  | 5 |  |  |  | 1 |  |  |  | 7 |  |  |  | 886 |  |  |  | 935 |  |  |  | 973 |  |  |  | 66 |  |  |  | 67 |  |  |  | 64 |
Federal excise tax |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,423 |  |  |  | 1,338 |  |  |  | 1,320 |  |  |  | - |  |  |  | - |  |  |  | - |
Depreciation and depletion (b) |  |  | 636 |  |  |  | 498 |  |  |  | 528 |  |  |  | 452 |  |  |  | 242 |  |  |  | 214 |  |  |  | 12 |  |  |  | 12 |  |  |  | 13 |
Financing costs (note 12) |  |  | 9 |  |  |  | (1 | ) |  |  | 2 |  |  |  | 2 |  |  |  | - |  |  |  | (1 | ) |  |  | - |  |  |  | - |  |  |  | - |
Total expenses |  |  | 7,940 |  |  |  | 6,341 |  |  |  | 6,694 |  |  |  | 26,086 |  |  |  | 25,400 |  |  |  | 25,599 |  |  |  | 1,353 |  |  |  | 1,379 |  |  |  | 1,478 |
Income before income taxes |  |  | 2,247 |  |  |  | 2,489 |  |  |  | 3,212 |  |  |  | 1,401 |  |  |  | 2,361 |  |  |  | 1,157 |  |  |  | 221 |  |  |  | 222 |  |  |  | 163 |
Income taxes (note 3) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current |  |  | (14 | ) |  |  | 72 |  |  |  | 593 |  |  |  | 395 |  |  |  | 486 |  |  |  | 372 |  |  |  | 62 |  |  |  | 67 |  |  |  | 43 |
Deferred |  |  | 549 |  |  |  | 529 |  |  |  | 162 |  |  |  | (46 | ) |  |  | 103 |  |  |  | (99 | ) |  |  | (3 | ) |  |  | (10 | ) |  |  | (2 | )
Total income tax expense |  |  | 535 |  |  |  | 601 |  |  |  | 755 |  |  |  | 349 |  |  |  | 589 |  |  |  | 273 |  |  |  | 59 |  |  |  | 57 |  |  |  | 41 |
Net income |  |  | 1,712 |  |  |  | 1,888 |  |  |  | 2,457 |  |  |  | 1,052 |  |  |  | 1,772 |  |  |  | 884 |  |  |  | 162 |  |  |  | 165 |  |  |  | 122 |
Cash flows from (used in) operating activities |  |  | 1,690 |  |  |  | 2,625 |  |  |  | 3,252 |  |  |  | 1,453 |  |  |  | 1,961 |  |  |  | 1,315 |  |  |  | 198 |  |  |  | 127 |  |  |  | 53 |
Capital and exploration expenditures (c) |  |  | 7,755 |  |  |  | 5,518 |  |  |  | 3,880 |  |  |  | 187 |  |  |  | 140 |  |  |  | 166 |  |  |  | 9 |  |  |  | 4 |  |  |  | 4 |
Property, plant and equipment |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cost |  |  | 38,819 |  |  |  | 30,602 |  |  |  | 25,327 |  |  |  | 7,146 |  |  |  | 7,038 |  |  |  | 6,990 |  |  |  | 771 |  |  |  | 765 |  |  |  | 760 |
Accumulated depreciation and depletion |  |  | (10,749 | ) |  |  | (10,146 | ) |  |  | (9,747 | ) |  |  | (4,347 | ) |  |  | (3,967 | ) |  |  | (3,803 | ) |  |  | (586 | ) |  |  | (576 | ) |  |  | (560 | )
Net property, plant and equipment (d) |  |  | 28,070 |  |  |  | 20,456 |  |  |  | 15,580 |  |  |  | 2,799 |  |  |  | 3,071 |  |  |  | 3,187 |  |  |  | 185 |  |  |  | 189 |  |  |  | 200 |
Total assets (e) |  |  | 30,553 |  |  |  | 22,317 |  |  |  | 17,222 |  |  |  | 5,732 |  |  |  | 6,409 |  |  |  | 6,700 |  |  |  | 397 |  |  |  | 372 |  |  |  | 397 |
|  | Corporate and Other |  |  | Eliminations |  |  | Consolidated |
millions of dollars |  | 2013 |  |  | 2012 |  |  | 2011 |  |  | 2013 |  |  | 2012 |  |  | 2011 |  |  | 2013 |  |  | 2012 |  |  | 2011 |
Revenues and other income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operating revenues (a) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 32,722 |  |  |  | 31,053 |  |  |  | 30,474 |
Intersegment sales |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (6,322 | ) |  |  | (7,012 | ) |  |  | (7,598 | ) |  |  | - |  |  |  | - |  |  |  | - |
Investment and other income |  |  | 3 |  |  |  | 8 |  |  |  | 9 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 207 |  |  |  | 135 |  |  |  | 240 |
|  |  | 3 |  |  |  | 8 |  |  |  | 9 |  |  |  | (6,322 | ) |  |  | (7,012 | ) |  |  | (7,598 | ) |  |  | 32,929 |  |  |  | 31,188 |  |  |  | 30,714 |
Expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Exploration |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 123 |  |  |  | 83 |  |  |  | 92 |
Purchases of crude oil and products |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (6,316 | ) |  |  | (7,011 | ) |  |  | (7,598 | ) |  |  | 20,155 |  |  |  | 18,476 |  |  |  | 18,847 |
Production and manufacturing (b) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (6 | ) |  |  | (1 | ) |  |  | - |  |  |  | 5,288 |  |  |  | 4,457 |  |  |  | 4,114 |
Selling and general |  |  | 125 |  |  |  | 78 |  |  |  | 124 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,082 |  |  |  | 1,081 |  |  |  | 1,168 |
Federal excise tax |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,423 |  |  |  | 1,338 |  |  |  | 1,320 |
Depreciation and depletion (b) |  |  | 10 |  |  |  | 9 |  |  |  | 9 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,110 |  |  |  | 761 |  |  |  | 764 |
Financing costs (note 12) |  |  | - |  |  |  | - |  |  |  | 2 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 11 |  |  |  | (1 | ) |  |  | 3 |
Total expenses |  |  | 135 |  |  |  | 87 |  |  |  | 135 |  |  |  | (6,322 | ) |  |  | (7,012 | ) |  |  | (7,598 | ) |  |  | 29,192 |  |  |  | 26,195 |  |  |  | 26,308 |
Income before income taxes |  |  | (132 | ) |  |  | (79 | ) |  |  | (126 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 3,737 |  |  |  | 4,993 |  |  |  | 4,406 |
Income taxes (note 3) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current |  |  | (18 | ) |  |  | (32 | ) |  |  | (53 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 425 |  |  |  | 593 |  |  |  | 955 |
Deferred |  |  | (16 | ) |  |  | 12 |  |  |  | 19 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 484 |  |  |  | 634 |  |  |  | 80 |
Total income tax expense |  |  | (34 | ) |  |  | (20 | ) |  |  | (34 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 909 |  |  |  | 1,227 |  |  |  | 1,035 |
Net income |  |  | (98 | ) |  |  | (59 | ) |  |  | (92 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 2,828 |  |  |  | 3,766 |  |  |  | 3,371 |
Cash flows from (used in) operating activities |  |  | (49 | ) |  |  | (33 | ) |  |  | (131 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 3,292 |  |  |  | 4,680 |  |  |  | 4,489 |
Capital and exploration expenditures (c) |  |  | 69 |  |  |  | 21 |  |  |  | 16 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 8,020 |  |  |  | 5,683 |  |  |  | 4,066 |
Property, plant and equipment |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cost |  |  | 429 |  |  |  | 360 |  |  |  | 339 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 47,165 |  |  |  | 38,765 |  |  |  | 33,416 |
Accumulated depreciation and depletion |  |  | (163 | ) |  |  | (154 | ) |  |  | (144 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (15,845 | ) |  |  | (14,843 | ) |  |  | (14,254 | )
Net property, plant and equipment (d) |  |  | 266 |  |  |  | 206 |  |  |  | 195 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 31,320 |  |  |  | 23,922 |  |  |  | 19,162 |
Total assets (e) |  |  | 581 |  |  |  | 704 |  |  |  | 1,418 |  |  |  | (45 | ) |  |  | (438 | ) |  |  | (308 | ) |  |  | 37,218 |  |  |  | 29,364 |  |  |  | 25,429 |
(a) | Includes export sales to the United States of $5,217 million (2012 - $4,358 million, 2011 - $4,175 million). Export sales to the United States were recorded in all operating segments, with the largest effects in the Upstream segment.
(b) | A 2013 charge in the Downstream segment of $377 million ($280 million, after-tax) associated with the company’s decision to convert the Dartmouth refinery to a terminal included the write-down of refinery plant and equipment not included in the terminal conversion of $245 million, reported as part of depreciation and depletion expenses, and decommissioning, environmental and employee-related costs of $132 million, reported as part of production and manufacturing expenses. By the end of 2013, amounts incurred associated with decommissioning, environmental and employee-related costs totalled $40 million.
(c) | Capital and exploration expenditures (CAPEX) include exploration expenses, additions to property, plant, equipment and intangibles and additions to capital leases.
(d) | Includes property, plant and equipment under construction of $9,234 million (2012 - $13,846 million).
(e) | The majority of the goodwill has been assigned to the Downstream segment. Goodwill of $20 million was recognized in 2013 in the Upstream segment as a result of the Celtic acquisition (note 18). There have been no goodwill impairment losses or write-offs due to sales in the past three years. Fair value used in quantitative goodwill impairment tests was Level 3 (unobservable inputs).

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8380-108599 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8933-108599 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8538-108599 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8844-108599 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 29 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8864-108599 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8981-108599 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8984-108599 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8906-108599 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9054-108599 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8924-108599 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9031-108599 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 33 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8971-108599 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 12 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8595-108599 + Details
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