7. OIL AND NATURAL GAS PROPERTIES AND RELATED EQUIPMENT

Gathering and transportation assets consist of the following (in thousands):


	June 30,		December 31,
	2017		2016
Gathering and transportation assets
Midstream assets	$	176,195	$	152,209
Less: Accumulated depreciation and amortization		(23,203)		(15,020)
Total gathering and transportation assets	$	152,992	$	137,189

Oil and natural gas properties consisted of the following (in thousands):



	June 30,		December 31,
	2017		2016
Oil and natural gas properties and related equipment
Property costs
Proved property	$	757,150	$	758,366
Unproved property		54		46
Land		501		501
Total property costs		757,705		758,913
Materials and supplies		1,056		1,056
Total		758,761		759,969
Less: Accumulated depreciation, depletion, amortization and impairments		(685,112)		(674,338)
Oil and natural gas properties and equipment, net	$	73,649	$	85,631

Oil and Natural Gas Properties We follow the successful efforts method of accounting for our oil and natural gas production activities. Under this method of accounting, costs relating to leasehold acquisition, property acquisition and the development of proved areas are capitalized when incurred. If proved reserves are found on an undeveloped property, leasehold cost is transferred to proved properties.

Depreciation, Depletion and Amortization. Depreciation and depletion of producing oil and natural gas properties is recorded at the field level, based on the units-of-production method. Unit rates are computed for unamortized drilling and development costs using proved developed reserves and for unamortized leasehold costs using all proved reserves. Acquisition costs of proved properties are amortized on the basis of all proved reserves, developed and undeveloped, and capitalized development costs (including wells and related equipment and facilities) are amortized on the basis of proved developed reserves.

All other properties, including the gathering and transportation assets, are stated at historical acquisition cost, net of any impairments, and are depreciated using the straight-line method over the useful lives of the assets, which range from 3 to 15 years for furniture and equipment, and up to 36 years for gathering facilities.

Depreciation, depletion, amortization and impairments consisted of the following (in thousands):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2017		2016		2017		2016
Depreciation, depletion and amortization of oil and natural gas-related assets	$	2,877	$	942	$	6,111	$	2,962
Depreciation, depletion and amortization of gathering and transportation-related assets		2,648		1,728		8,183		3,438
Amortization of intangible assets		3,412		3,459		6,824		6,917
Total Depreciation, depletion and amortization		8,937		6,129		21,118		13,317
Asset impairments		—		—		4,688		1,309
Total	$	8,937	$	6,129	$	25,806	$	14,626

Impairment of Oil and Natural Gas Properties and Other Non-Current Assets. Oil and natural gas properties are reviewed for impairment on a field-by-field basis when facts and circumstances indicate that their carrying value may not be recoverable. We assess impairment of capitalized costs of proved oil and natural gas properties by comparing net capitalized costs to estimated undiscounted future net cash flows using expected prices. If net capitalized costs exceed estimated undiscounted future net cash flows, the measurement of impairment is based on estimated fair value, which would consider estimated future discounted cash flows. The cash flow estimates are based upon reserve reports using future expected oil and natural gas prices adjusted for basis differentials. Other significant inputs, besides reserves, used to determine the fair values of proved properties include estimates of: (i) future operating and development costs; (ii) future commodity prices; and (iii) a market-based weighted average cost of capital rate. These inputs require significant judgments and estimates by the Partnership’s management at the time of the valuation and are the most sensitive and subject to change. Cash flow estimates for impairment testing exclude derivative instruments.

For the three months ended June 30, 2017, we recorded no impairment charges. For the six months ended June 30, 2017, we recorded non-cash charges of $4.7 million, to impair certain producing oil and natural gas properties in Texas acquired as part of the Production Acquisition. For the three months ended June 30, 2016, we did not record impairment charges. For the six months ended June 30, 2016, we recorded non-cash charges of $1.3 million, to impair our producing oil and natural gas properties in Texas and Louisiana acquired prior to the Eagle Ford acquisition.

Asset Retirement Obligation. As described in Note 8, estimated asset retirement costs are recognized when the asset is acquired or placed in service, and are amortized over proved developed reserves using the units-of-production method. Asset retirement costs are estimated by our engineers using existing regulatory requirements and anticipated future inflation rates.

Exploration and Dry Hole Costs. Exploration and dry hole costs represent abandonments of drilling locations, dry hole costs, delay rentals, geological and geophysical costs and the impairment, amortization and abandonment associated with leases on our unproved properties. All such costs on oil and natural gas properties relating to unsuccessful exploratory wells are charged to expense as incurred. We recorded no exploration or dry hole costs for the six months ended June 30, 2017 or 2016.