|3 Months Ended|
Mar. 31, 2019
Discontinued Operations - Angola
In November 2006, we signed a production sharing contract for Block 5 offshore Angola (“Block 5 PSA”). Our working interest is 40%, and we carry Sonangol P&P, for 10% of the work program. On September 30, 2016, we notified Sonangol P&P that we were withdrawing from the joint operating agreement effective October 31, 2016. On November 30, 2016, we notified the national concessionaire, Sonangol E.P., that we were withdrawing from the Block 5 PSA. Further to the decision to withdraw from Angola, we have taken actions to close our office in Angola and reduce future activities in Angola. As a result of this strategic shift, we classified all the related assets and liabilities as those of discontinued operations in the condensed consolidated balance sheets. The operating results of the Angola segment have been classified as discontinued operations for all periods presented in our condensed consolidated statements of operations. We segregated the cash flows attributable to the Angola segment from the cash flows from continuing operations for all periods presented in our condensed consolidated statements of cash flows. The following tables summarize selected financial information related to the Angola segment’s assets and liabilities as of March 31, 2019 and December 31, 2018 and its results of operations for the three months ended March 31, 2019 and 2018.
Summarized Results of Discontinued Operations
Assets and Liabilities Attributable to Discontinued Operations
Under the Block 5 PSA, we and the other participating interest owner, Sonangol P&P, were obligated to perform exploration activities that included specified seismic activities and drilling a specified number of wells during each of the exploration phases identified in the Block 5 PSA. The specified seismic activities were completed, and one well, the Kindele #1 well, was drilled in 2015. The Block 5 PSA provides a stipulated payment of $10.0 million for each of the three exploration wells for which a drilling obligation remains under the terms of the Block 5 PSA, of which our participating interest share would be $5.0 million per well. We reflected an accrual of $15.0 million for a potential payment as of December 31, 2018. The Company and Sonangol E.P. finalized and signed a settlement agreement which allows for the termination of the Company’s rights, liabilities and outstanding obligations for Block 5 in Angola in the first quarter of 2019. The settlement agreement includes a payment of $4.5 million from the Company and elimination of the $3.3 million receivable from Sonangol P&P. The receivable is related to joint interest billings and was reflected as current assets from discontinued operations at year-end 2018. The cash payment from the Company will become due within 15 days after the execution of an executive decree from the Ministry of Mineral Resources and Petroleum. As a result, the Company adjusted a previously accrued liability and recognized a net of tax non-cash benefit from discontinued operations of $5.7 million in the first quarter of 2019.
The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef