Property, Plant and Equipment

The following table sets forth the Company’s property, plant and equipment:



	December 31,
	2016			2015
	(In thousands)
Proved oil and gas properties⁽¹⁾	$	6,476,833		$	5,655,759
Less: Accumulated depreciation, depletion, amortization and impairment	(1,886,732		)	(1,428,427		)
Proved oil and gas properties, net	4,590,101			4,227,332
Unproved oil and gas properties	819,735			628,642
Other property and equipment	618,790			443,265
Less: Accumulated depreciation	(109,059		)	(80,997		)
Other property and equipment, net	509,731			362,268
Total property, plant and equipment, net	$	5,919,567		$	5,218,242

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(1)	Included in the Company’s proved oil and gas properties are estimates of future asset retirement costs of $42.9 million and $30.7 million at December 31, 2016 and 2015, respectively.

Impairment. The Company reviews its proved oil and natural gas properties for impairment whenever events and circumstances indicate that a decline in the recoverability of their carrying value may have occurred. The Company estimates the expected undiscounted future cash flows of its proved oil and natural gas properties and then compares such amount to the carrying amount of the proved oil and natural gas properties to determine if the carrying amount is recoverable. If the carrying amount exceeds the estimated undiscounted future cash flows, the Company will adjust the carrying amount of the proved oil and natural gas properties to fair value. The factors used to determine fair value are subject to management’s judgment and expertise and include, but are not limited to, recent sales prices of comparable properties, the present value of future cash flows net of estimated operating and development costs using estimates of proved reserves, future commodity pricing, future production estimates, anticipated capital expenditures and various discount rates commensurate with the risk and current market conditions associated with realizing the expected cash flows projected. These assumptions represent Level 3 inputs, as further discussed under Note 3 — Fair Value Measurements.

As of December 31, 2016, the Company sold certain proved oil and natural gas properties and other midstream properties (see Note 6 – Acquisitions and Divestiture). For the year ended December 31, 2016, the Company recorded an impairment charge of $3.6 million, of which $2.4 million was included in its midstream services segment and $1.1 million was included in its exploration and production segment, to adjust the carrying amount of these assets, net of the associated ARO liabilities, to their estimated fair value. For the year ended December 31, 2015, the Company had certain proved oil and natural gas properties held for sale (see Note 6 – Acquisitions and Divestitures). The Company recorded an impairment loss of $9.4 million, which was included in earnings in its exploration and production segment for the year ended December 31, 2015, to adjust the carrying amount of these assets, net of the associated ARO liabilities, of $25.9 million to their estimated fair value of $16.5 million. The fair value was determined based on the expected sales price, less costs to sell.

Due to lower expected commodity prices, the Company determined that the carrying amount exceeded expected undiscounted cash flows for certain legacy wells that were producing from conventional reservoirs such as the Madison, Red River and other formations in the Williston Basin other than the Bakken or Three Forks formations for the year ended December 31, 2014. As a result, these assets, with a carrying amount of $76.4 million, were written down to their fair value of $36.4 million, resulting in an impairment charge of $40.0 million, which was included in earnings in the Company’s exploration and production segment for the year ended December 31, 2014. The fair value of these assets was measured using valuation techniques that convert future cash flows to a single discounted amount. Significant inputs used to determine the fair value included estimates of: (i) reserves, (ii) future operating and development costs, (iii) future commodity prices, and (iv) a weighted average cost of capital rate based on the assumptions of a market participant. The market-based weighted average cost of capital rate is subjected to additional project-specific risking factors. For the year ended December 31, 2014, the underlying commodity prices embedded in the Company’s estimated cash flows were determined using NYMEX forward swap prices for five years, holding the fifth year price constant thereafter. As of December 31, 2015, a 3% inflation factor was applied to the underlying commodity prices and future operating and development costs after five years in the Company’s estimated cash flows.

In addition, as a result of expiring leases and periodic assessments of unproved properties, the Company recorded non-cash impairment charges on its unproved oil and gas properties of $1.1 million, $36.6 million, and $7.3 million for the years ended December 31, 2016, 2015 and 2014, respectively.