Asset Retirement Obligations

9 Months Ended

Sep. 30, 2012

Asset Retirement Obligations [Abstract]

NOTE 7 – ASSET RETIREMENT OBLIGATIONS

We record the asset retirement obligation (“ARO”) liability on our unaudited consolidated balance sheet and capitalize the cost in the “Oil and gas properties, using the full cost method of accounting” balance sheet caption during the period in which the obligation is incurred. We record the accretion of our ARO liabilities in “Accretion of asset retirement obligations” expense in our unaudited consolidated statements of operations. Payments to settle asset retirement obligations occur over the lives of the oil and gas properties. Revisions during the reporting period were due to changes in cost estimates for wells currently being retired.

Changes in our asset retirement obligations for nine months ended September 30, 2012 are presented in the following table:



		Nine Months Ended
		September 30, 2012
Beginning of period	$	65,701
Assumed in acquisition		4,738
Divested		(23)
Revisions to previous estimates		2,928
Liabilities incurred		1,208
Liabilities settled		(2,845)
Accretion expense		2,645
End of period	$	74,352
Less: Current portion of asset retirement obligations		(845)
Asset retirement obligations - non-current	$	73,507

- Definition

The entire disclosure for an asset retirement obligation and the associated long-lived asset. An asset retirement obligation is a legal obligation associated with the disposal or retirement from service of a tangible long-lived asset that results from the acquisition, construction or development, or the normal operations of a long-lived asset, except for certain obligations of lessees.

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