ASSET RETIREMENT OBLIGATION

12 Months Ended

Dec. 31, 2015

ASSET RETIREMENT OBLIGATION [Abstract]

ASSET RETIREMENT OBLIGATION

NOTE 9     ASSET RETIREMENT OBLIGATION

The Company has asset retirement obligations ("ARO") associated with the future plugging and abandonment of proved properties and related facilities.  Initially, the fair value of a liability for an ARO is recorded in the period in which it is incurred and a corresponding increase in the carrying amount of the related long lived asset.  The liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset.  If the liability is settled for an amount other than the recorded amount, a gain or loss is recognized.  The Company has no assets that are legally restricted for purposes of settling asset retirement obligations.  No settlements of asset retirement obligations have occurred during the periods presented.

Inherent in the fair value calculation are numerous assumptions and judgments including the ultimate retirement costs, inflation factors, credit-adjusted discount rates, timing of retirement, and changes in the legal, regulatory, environmental and political environments.  To the extent future revisions to these assumptions impact the present value of the existing ARO, a corresponding adjustment is made to the oil and gas property balance.  For example, as the Company analyzes actual plugging and abandonment information, the Company may revise its estimate of current costs, the assumed annual inflation of the costs and/or the assumed productive lives of its wells.  During 2015, the Company decreased its existing ARO by $0.1 million or approximately 1% of the ARO liability at December 31, 2015.  During 2014, the Company increased its existing ARO by $0.1 million or approximately 2% of the ARO liability at December 31, 2014.  This increase was due to an increase in the estimated costs to plug and abandon the Company's wells and a decrease in the productive life of certain of its oil and gas properties.

The following table summarizes the Company's asset retirement obligation transactions recorded during the year ended December 31, 2015 and 2014.

	Year Ended December 31,
	2015			2014
Beginning Asset Retirement Obligation	$	5,105,762		$	3,824,002
Liabilities Incurred During the Period		475,306			868,460
Revision of Estimates		(53,912	)		83,626
Accretion of Discount on Asset Retirement Obligations		372,461			461,762
Liabilities Settled During the Period		(83,261	)		(132,088	)
Ending Asset Retirement Obligation	$	5,816,356		$	5,105,762