Asset retirement obligation

12 Months Ended

Dec. 31, 2021

Asset retirement obligation

Asset Retirement Obligation

14. Asset Retirement Obligations

Asset retirement obligations (“ARO”) relate to minor non-operated interests in oil and natural gas wells in which NXT has outstanding abandonment and reclamation obligations in accordance with government regulations. The estimated future abandonment liability is based on estimates of the future timing and costs to abandon, remediate and reclaim the well sites within the next five years. The net present value of the ARO is as noted below, and has been calculated using an inflation rate of 3.4% and discounted using a credit-adjusted risk-free interest rate of 10%.

	2021			2020			2019
ARO balance, beginning of the year	$	22,741		$	21,481		$	26,779
Accretion expense		2,069			2,069			2,068
Change in ARO estimates		(2,473	)		-			-
Costs incurred		-			(809	)		(7,366	)
ARO balance, end of the year		22,337			22,741			21,481