In the second quarter of 2003, the Corporation sold produc- ing properties in the Gulf of Mexico shelf, the Jabung Field in Indonesia and several small United Kingdom fields. The aggregate proceeds from these sales were $445 million and the pre-tax gain from disposition was $248 million. With respect to the assets sold in the second quarter of 2003, the net book value of fixed assets at the time of sale was approximately $295 million ($275 million at December 31, 2002) and the related dismantlement and deferred tax liabilities were approximately $160 million ($170 million at December 31, 2002). reflected losses on less than 10% of the Corporation’s crude oil and natural gas hedges.  The Corporation recorded a pre-tax charge of $18 million for severance expenses resulting from cost reduction initiatives, all of which has been paid. The cost reduction program reflected the elimination of approximately 150 posi- tions, principally in exploration and production operations. Substantially all of the pre-tax cost of these items are reflected in general and administrative expense in the income statement. Sales and other operating revenues (net of intercompany sales) from discontinued operations were $97 million in 2003, $381 million in 2002 and $361 million in 2001. Pretax operating profit for the same periods was $82 million, $14 million and $120 million, respectively. Income tax expense (benefit) was $29 million, $(13) million and $22 mil- lion for the same periods. The net production from fields accounted for as discontinued operations in 2003 at the time of disposition was approximately 45,000 barrels of oil equivalent per day. In 2003, the Corporation took initiatives to reshape its port- folio of exploration and production assets to reduce costs, lengthen reserve lives, provide capital for investment and reduce debt. In the first quarter of 2003, the Corporation exchanged its crude oil producing properties in Colombia (acquired in 2001 as part of the Triton acquisition), plus $10 million in cash, for an additional 25% interest in natural gas reserves in the joint development area of Malaysia and Thailand. The exchange resulted in a charge to income of $51 million before income taxes, which the Corporation reported as a loss from discontinued operations in the first quarter of 2003. The loss on this exchange included a $43 million pre- tax adjustment of the book value of the Colombian assets to fair value resulting primarily from a revision in crude oil reserves. The loss also included a $26 million charge from the recognition in earnings of the value of related hedge contracts at the time of the exchange. These items were partially offset by pre-tax earnings of $18 million in Colom- bia prior to the exchange. On January 1, 2003, the Corporation changed its method of accounting for asset retirement obligations as required by FAS No. 143,  Accounting for Asset Retirement Obligations. Previously, the Corporation had accrued the estimated costs of dismantlement, restoration and aban- donment, less estimated salvage values, of offshore oil and gas production platforms and pipelines using the units- of-production method. This cost was reported as a component of depreciation expense and accumulated depreciation. Using the new accounting method required by FAS No. 143, the Corporation now recognizes a liability for the fair value of legally required asset retire- ment obligations associated with long-lived assets in the period in which the retirement obligations are incurred. The Corporation capitalizes the associated asset retire- ment costs as part of the carrying amount of the  long-lived assets. In this exchange transaction, the Corporation acquired the 50% interest in a corporate joint venture that it did not already own. Prior to the exchange, the Corporation accounted for its 50% interest in the corporate joint venture using the equity method. Because of the exchange, the joint venture became a wholly owned subsidiary. Consequently, the Corporation has consolidated this subsidiary, which holds a 50% interest in a production sharing contract with natural gas reserves in the joint development area of Malaysia and Thailand. At the time of the exchange, the exploration and production segment included the net book value of fixed assets in Colombia of $670 million ($685 mil- lion at December 31, 2002) and a related deferred income tax liability of $142 million ($145 million at December 31, 2002). The cumulative effect of this change on prior years resulted in a credit to income of $7 million or $.07 per share, basic and diluted. The cumulative effect is included in income for the year ended December 31, 2003. The effect of the change on the year 2003 was to increase income before the cumu- lative effect of the accounting change by $3 million, after- 44 4. ACCOUNTING CHANGE 3. DISCONTINUED OPERATIONS