With independent auditor’s report

Recoverability of oil and gas assets, midstream, refining and other assets
The Group assesses assets or CGU for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Such indicators include changes in the Group’s
business plans, changes in commodity prices leading to unprofitable performances, changes in product mixes,
and for oil and gas properties, significant downward revisions of estimated proved reserves. Where an indicator
of impairment exists, a formal estimate of the recoverable amount is made, which is considered to be the
higher of the fair value less costs to sell and value in use. These assessments require the use of estimates
and assumptions such as long-term oil prices, discount rates, future capital requirements, operating
performance (including production and sales volumes) that are subject to risk and uncertainty. Where the
carrying amount of an asset or CGU exceeds its recoverable amount, the asset/CGU is considered to be
impaired and is written down to its recoverable amount. In assessing recoverable amount, the estimated future
cash flows are adjusted for the risks specific to the asset group and are discounted to their present value using
a discount rate that reflects current market assessments of the time value of money and the risks specific to
the asset. Fair value less costs to sell is identified as the price that would be received to sell the asset in an
orderly transaction between market participants and does not reflect the effects of factors that may be specific
to the entity and not applicable to entities in general.
Assets retirement obligations
Under the provisions of current legislation and regulations, the Group has legal or constructive obligations to
dismantle and remove tangible assets and restore the land at each production site. Specifically, the Group’s
obligation relates to the ongoing closure of all non-producing wells. The settlement date of the final closure
obligations has been assumed to be the end of production period due to economic life test of the oil and gas
reserves.
Where neither subsoil use contracts nor legislation include an unambiguous obligation to undertake or finance
such final abandonment and closure costs at the end of the subsoil use contract term, no liability has been
recognized. There is some uncertainty and significant judgment involved in making such a determination.
Management’s assessment of the presence or absence of such obligations could change with shifts in policies
and practices of the Government or in the local industry practice.

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