The effective income tax rate for exploration and production operations in 2003 was 51%. This includes income taxes paid in jurisdictions with rates in excess of the United States statutory rate in several producing areas, such as the United Kingdom and Norway. It also reflects an income tax deduction for the Corporation’s hedging results at the U.S. statutory rate. In addition, certain expenses in foreign juris- dictions are benefited at rates equal to or below the U.S. statutory rate. Each of these factors increases the Corpora- tion’s overall exploration and production effective income tax rate. During 2002, the United Kingdom government enacted a 10% supplementary tax on profits from oil and gas production. The effect of this supplementary tax was an increase in exploration and production income taxes of approximately $60 million in 2003 and $37 million in 2002. The effective income tax rate for exploration and production operations in 2004 is expected to be in the range of 47% to 51%.  Exploration and production earnings from continuing opera- tions include the following items: 2003: The Corporation recorded an after-tax charge of $32 million for accrued severance in the United States and United Kingdom and a reduction of leased office space in London. The pre-tax amount of this charge was $53 million, of which $32 million relates to leased office space. The remainder of $21 million relates to severance for positions that were eliminated in London, Aberdeen and Houston. Over 700 employee and contractor positions have been or will be eliminated. Approximately 240 employees are receiv- ing severance, $15 million of which has been paid through year-end. The remainder is expected to be paid in 2004. Additional accruals for severance and lease costs of approximately $15 million before income taxes are antici- pated in the first half of 2004. The annual savings from this cost reduction initiative is estimated to be approximately $50 million before income taxes. The Corporation antici- pates realizing approximately sixty percent of these savings in 2004 and the full amount in 2005. The Corporation recorded an income tax benefit of $30 mil- lion reflecting the recognition for United States income tax purposes of certain prior year foreign exploration expenses. Gains from asset sales in 2003 reflect $31 million ($47 million before income taxes) from the sale of the Corporation’s 1.5% interest in the Trans Alaska Pipeline System. 2002: Exploration and production earnings included after- tax asset impairments of $737 million ($1,024 million before income taxes), $530 million of which related to the Ceiba Field in Equatorial Guinea. The pre-tax amount of the Ceiba Field impairment was $706 million. The charge resulted from a 12% reduction in the estimated total field reserves that will ultimately be produced from the field, as well as higher antic- ipated development costs needed to produce the remaining reserves at lower production rates over a longer time frame.  The amount of Ceiba Field proved reserves was about the same at the end of 2002 as the amount at the beginning of the year (excluding 2002 production) and, therefore, the 12% reduction in total field reserves resulted from a decrease in probable reserves. The net proved reserves did not change in 2002 as a result of the recognition of a more efficient primary recovery factor than previously estimated, and to a lesser extent the positive impact of the initiation of water injection operations in February 2002 to maintain reservoir pressure, and additional drilling. 18 After Income Taxes Millions of dollars 2003 2002 2001 Accrued severance and London office lease costs $(32) $ GLYPH<209> $(10) United States income tax benefit 30 GLYPH<209> GLYPH<209> Gains from asset sales 31 34 GLYPH<209> Asset impairments GLYPH<209> (737) GLYPH<209> Charge for increase in United  Kingdom income tax rate GLYPH<209> (43) GLYPH<209> Charge related to Enron  bankruptcy GLYPH<209> GLYPH<209> (19) $2 9 $(746) $(29) Before Income Taxes Millions of dollars 2003 2002 2001 Accrued severance and London office lease costs $(53) $ GLYPH<209> $(15) Gains from asset sales 47 41 GLYPH<209> Asset impairments GLYPH<209> (1,024) GLYPH<209> Charge related to Enron  bankruptcy GLYPH<209> GLYPH<209> (29) $ (6) $ (983) $(44)