Asset Retirement Obligation

9 Months Ended

Sep. 30, 2013

ASSET RETIREMENT OBLIGATION

NOTE 3—ASSET RETIREMENT OBLIGATION

The Partnership recognized an estimated liability for the plugging and abandonment of its oil and gas wells and related facilities. It also recognizes a liability for future asset retirement obligations if a reasonable estimate of the fair value of that liability can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. The Partnership also considered the estimated salvage value in the depletion calculation. The estimated liability is based on the MGP’s historical experience in plugging and abandoning wells, estimated remaining lives of those wells based on reserve estimates, external estimates as to the cost to plug and abandon the wells in the future and federal and state regulatory requirements. The liability is discounted using an assumed credit-adjusted risk-free interest rate. Revisions to the liability could occur due to changes in cost estimates, remaining lives of the wells or if federal or state regulators enact new plugging and abandonment requirements. The Partnership has no assets legally restricted for purposes of settling asset retirement obligations. Except for the Partnership’s gas and oil properties, the Partnership determined that there were no other material retirement obligations associated with tangible long-lived assets.

A reconciliation of the Partnership’s liability for plugging and abandonment costs for the periods indicated is as follows:

	ThreeMonthsEnded September30,				NineMonthsEnded September30,
	2013		2012		2013		2012
Asset retirement obligation at beginning of period	$	3,053,100	$	2,985,500	$	2,972,300	$	2,911,300
Accretion expense		40,400		37,100		121,200		111,300
Asset retirement obligation at end of period	$	3,093,500	$	3,022,600	$	3,093,500	$	3,022,600