PROPERTY AND EQUIPMENT AND ASSET RETIREMENT OBLIGATION

Barnwell’s property and equipment is detailed as follows:



	Estimated Useful Lives	Gross Property and Equipment		Accumulated Depletion, Depreciation, and Amortization			Net Property and Equipment
At September 30, 2019:
Land		$	200,000	$	—		$	200,000
Oil and natural gas properties
(full cost accounting)		62,205,000		(55,972,000		)	6,233,000
Drilling rigs and equipment	3 – 10 years	7,882,000		(6,484,000		)	1,398,000
Office	40 years	857,000		(338,000		)	519,000
Other property and equipment	3 – 17 years	1,378,000		(1,340,000		)	38,000
Total		$	72,522,000	$	(64,134,000	)	$	8,388,000



	Estimated Useful Lives	Gross Property and Equipment		Accumulated Depletion, Depreciation, and Amortization			Net Property and Equipment
At September 30, 2018:
Land		$	200,000	$	—		$	200,000
Oil and natural gas properties
(full cost accounting)		63,946,000		(48,769,000		)	15,177,000
Drilling rigs and equipment	3 – 10 years	6,620,000		(6,197,000		)	423,000
Office	40 years	857,000		(317,000		)	540,000
Other property and equipment	3 – 17 years	1,387,000		(1,316,000		)	71,000
Total		$	73,010,000	$	(56,599,000	)	$	16,411,000

See Note 5 for discussion of acquisitions and divestitures of oil and natural gas properties in fiscal 2019 and 2018.

Barnwell recognizes the fair value of a liability for an asset retirement obligation in the period in which it is incurred if a reasonable estimate of fair value can be made. The following is a reconciliation of the asset retirement obligation:



	Year ended September 30,
	2019			2018
Asset retirement obligation as of beginning of year	$	7,122,000		$	6,863,000
Obligations incurred on new wells drilled or acquired	203,000			3,085,000
Liabilities associated with properties sold	(43,000		)	(1,855,000		)
Revision of estimated obligation	(958,000		)	(547,000		)
Accretion expense	608,000			297,000
Payments	(372,000		)	(624,000		)
Foreign currency translation adjustment	(171,000		)	(97,000		)
Asset retirement obligation as of end of year	6,389,000			7,122,000
Less current portion	(330,000		)	(444,000		)
Asset retirement obligation, long-term	$	6,059,000		$	6,678,000

Asset retirement obligations were reduced by $43,000 and $1,855,000, in fiscal 2019 and 2018, respectively, for those obligations that were assumed by purchasers of Barnwell's oil and natural gas properties. Asset retirement obligations were also reduced by $958,000 in fiscal 2019 and $547,000 in fiscal 2018 due to downward revisions related to deferrals in the estimated timing of future abandonments as a result of changes in the estimated funds available to develop the Company's reserves in the Twining area. Asset retirement obligations increased by $203,000 in fiscal 2019 and $3,085,000 in fiscal 2018 due primarily to our acquisitions (see Note 5 for additional details). The asset retirement obligation reflects the estimated present value of the amount of dismantlement, removal, site reclamation, and similar activities associated with Barnwell's oil and gas properties. Barnwell estimates the ultimate productive life of the properties, a credit-adjusted risk-free rate, and an inflation factor in order to determine the current present value of this obligation. The credit-adjusted risk-free rate for the entire asset retirement obligation is a blended rate which ranges from 6% to 11%. The credit-adjusted risk-free rate for the asset retirement obligation acquired through the Twining acquisition is 11%.