Asset Retirement Obligations

6 Months Ended

Jun. 30, 2011

Notes To Financial Statements [Abstract]

Note 9 - Asset Retirement Obligations

Asset retirement obligations associated with retiring tangible long-lived assets are recognized as a liability in the period in which a legal obligation is incurred and becomes determinable and are included in "other noncurrent liabilities" on the condensed consolidated balance sheets. Accretion expense is included in "depreciation, depletion and amortization" on the condensed consolidated statements of operations. The fair value of additions to the asset retirement obligations is estimated using valuation techniques that convert future cash flows to a single discounted amount. Significant inputs to the valuation include estimates of: (i) plug and abandon costs per well based on existing regulatory requirements; (ii) remaining life per well; (iii) future inflation factors (2.0% for the six months ended June 30, 2011); and (iv) a credit-adjusted risk-free interest rate (average of 7.4% for the six months ended June 30, 2011).

The following presents a reconciliation of the asset retirement obligations (in thousands):

Asset retirement obligations at December 31, 2010	$	42,945
Liabilities added from acquisitions		6,966
Liabilities added from drilling		630
Current year accretion expense		1,817
Settlements		(1,028	)
Revision of estimate		784
Asset retirement obligations at June 30, 2011	$	52,114