NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  NOTE 1 - STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES continued  Impairment of Non-Financial Assets  Exploration and Evaluation  Restoration Provision  Units of Production Depreciation  - 69 -  Development and production assets are depreciated using the units of production method over economically  recoverable reserves representing total proved and probable developed reserves. This results in a depreciation or  amortisation charge proportional to the depletion of the anticipated remaining production from the area of interest.  In most instances, the removal of the assets associated with these oil and gas producing areas will occur many years  in the future. The estimate of future removal costs therefore requires management to make significant judgements  regarding removal date or well lives, the extent of restoration activities required, discount and inflation rates. A provision for rehabilitation and restoration is provided by the Group to meet all future obligations for the  restoration and rehabilitation of oil and gas producing areas when oil and gas reserves are exhausted and the oil and  gas fields are abandoned. Restoration liabilities are discounted to present value and capitalised as a component part  of capitalised development expenditure. The capitalised costs are amortised over the units of production and the  provision is revised at each balance sheet date through the consolidated statement of profit or loss and other  comprehensive income as the discounting of the liability unwinds. The Company’s policy for exploration and evaluation is discussed in Note 1 (b). The application of this policy requires  the Company to make certain estimates and assumptions as to future events and circumstances, particularly in  relation to the assessment of whether economic quantities of reserves have been found. Any such estimates and  assumptions may change as new information becomes available. If, after having capitalised exploration and  evaluation expenditure, management concludes that the capitalised expenditure is unlikely to be recovered by  future sale or exploitation, then the relevant capitalised amount will be written off through the consolidated  statement of profit or loss and other comprehensive income.  The Group assesses impairment at each reporting date by evaluating conditions specific to the Group that may lead  to impairment of assets. Where an indicator of impairment exists, the recoverable amount of the cash-generating  unit to which the assets belong is then estimated based on the present value of future discounted cash flows. For  development and production assets, the expected future cash flow estimation is always based on a number of  factors, variables and assumptions, the most important of which are estimates of reserves, future production  profiles, commodity prices and costs. In most cases, the present value of future cash flows is most sensitive to  estimates of future oil price and discount rates. A change in the modeled assumptions in isolation could materially  change the recoverable amount. However, due to the interrelated nature of the assumptions, movements in any  one variable can have an indirect impact on others and individual variables rarely change in isolation. Additional,  management can be expected to respond to some movements, to mitigate downsides and take advantage of  upsides, as circumstances allow. Consequently, it is impracticable to estimate the indirect impact that a change in  one assumption has on other variables and therefore, on the extent of impairments under different sets of  assumptions in subsequent reporting periods. In the event that future circumstances vary from these assumptions,  the recoverable amount of the Group’s development and production assets could change materially and result in  impairment losses or the reversal of previous impairment losses. 