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Property and equipment
 3 Months Ended
Mar. 31, 2020
Property, Plant and Equipment [Abstract]  
Property and equipment Property and equipment
The following table presents the Company's property and equipment as of the dates presented:
(in thousands)
 
March 31, 2020
 
December 31, 2019
Evaluated oil and natural gas properties
 
$
7,610,086

 
$
7,421,799

Less accumulated depletion and impairment
 
(5,799,703
)
 
(5,725,114
)
Evaluated oil and natural gas properties, net
 
1,810,383

 
1,696,685

 
 
 
 
 
Unevaluated oil and natural gas properties not being depleted
 
130,077

 
142,354

 
 
 
 
 
Midstream service assets
 
180,992

 
180,932

Less accumulated depreciation and impairment
 
(62,453
)
 
(52,254
)
Midstream service assets, net
 
118,539

 
128,678

 
 
 
 
 
Depreciable other fixed assets
 
37,515

 
37,894

Less accumulated depreciation and amortization
 
(24,051
)
 
(23,649
)
Depreciable other fixed assets, net
 
13,464

 
14,245

 
 
 
 
 
Land
 
18,684

 
18,259

 
 
 
 
 
Total property and equipment, net
 
$
2,091,147

 
$
2,000,221


See Note 10.b for discussion of impairments of long-lived assets during the three months ended March 31, 2020. See Note 6 in the 2019 Annual Report for additional discussion of the Company's property and equipment.
The Company uses the full cost method of accounting for its oil and natural gas properties. Under this method, all acquisition, exploration and development costs, including certain employee-related costs, incurred for the purpose of acquiring, exploring for or developing oil and natural gas properties, are capitalized and, once evaluated, depleted on a composite unit-of-production method based on estimates of proved oil, NGL and natural gas reserves. The depletion base includes estimated future development costs and dismantlement, restoration and abandonment costs, net of estimated salvage values.
Capitalized costs include the cost of drilling and equipping productive wells, dry hole costs, lease acquisition costs, delay rentals and other costs related to such activities. Costs, including employee-related costs, associated with production and general corporate activities are expensed in the period incurred.
The Company excludes unevaluated property acquisition costs and exploration costs from the depletion calculation until it is determined whether or not proved reserves can be assigned to the properties. The Company capitalizes a portion of its interest costs to its unevaluated properties and such costs become subject to depletion when proved reserves can be assigned to the associated properties. All items classified as unevaluated properties are assessed on a quarterly basis for possible impairment. The assessment includes consideration of the following factors, among others: intent to drill, remaining lease term, geological and geophysical evaluations, drilling results and activity, the assignment of proved reserves and the economic viability of development if proved reserves are assigned. During any period in which these factors indicate an impairment, the cumulative drilling costs incurred to date for such property and all or a portion of the associated leasehold costs are transferred to the full cost pool and are then subject to depletion.
Sales of oil and natural gas properties, whether or not being depleted currently, are accounted for as adjustments of capitalized costs, with no gain or loss recognized, unless such adjustments would significantly alter the relationship between capitalized costs and proved reserves of oil, NGL and natural gas.
The following table presents costs incurred in the acquisition, exploration and development of oil and natural gas properties, with asset retirement obligations included in evaluated property acquisition costs and development costs, for the periods presented:
 
 
Three months ended March 31,
(in thousands)
 
2020
 
2019
Property acquisition costs:
 
 

 
 

Evaluated
 
$
7,586

 
$
—

Unevaluated
 
15,556

 
—

Exploration costs
 
6,710

 
7,505

Development costs
 
146,158

 
152,717

Total oil and natural gas properties costs incurred
 
$
176,010

 
$
160,222


The aforementioned total oil and natural gas properties costs incurred included certain employee-related costs as shown in the table below.
The following table presents capitalized employee-related costs incurred in the acquisition, exploration and development of oil and natural gas properties for the periods presented:
 
 
Three months ended March 31,
(in thousands)
 
2020
 
2019
Capitalized employee-related costs
 
$
4,505

 
$
6,682


The following table presents depletion expense, which is included in "Depletion, depreciation and amortization" on the unaudited consolidated statements of operations, and depletion expense per BOE sold of evaluated oil and natural gas properties for the periods presented:
 
 
Three months ended March 31,
 
 
2020
 
2019
Depletion expense of evaluated oil and natural gas properties
 
$
57,752

 
$
59,370

Depletion expense per BOE sold
 
$
7.33

 
$
8.76


The full cost ceiling is based principally on the estimated future net revenues from proved oil, NGL and natural gas reserves, which exclude the effect of the Company's commodity derivative transactions, discounted at 10%. The SEC guidelines require companies to use the unweighted arithmetic average first-day-of-the-month price for each month within the 12-month period prior to the end of the reporting period before differentials ("Benchmark Prices"). The Benchmark Prices are then adjusted for quality, transportation fees, geographical differentials, marketing bonuses or deductions and other factors affecting the price received at the wellhead ("Realized Prices") without giving effect to the Company's commodity derivative transactions. The
Realized Prices are utilized to calculate the discounted future net revenues in the full cost ceiling calculation. Significant inputs included in the calculation of discounted cash flows used in the impairment analysis include the Company's estimate of operating and development costs, anticipated production of proved reserves and other relevant data. In the event the unamortized cost of evaluated oil and natural gas properties being depleted exceeds the full cost ceiling, as defined by the SEC, the excess is expensed in the period such excess occurs. Once incurred, a write-down of oil and natural gas properties is not reversible.
The following table presents the Benchmark Prices and the Realized Prices as of the dates presented:
 
 
March 31, 2020
 
December 31, 2019
 
September 30, 2019
 
June 30, 2019
 
March 31, 2019
Benchmark Prices:
 
 
 
 
 
 
 
 
 
 
   Oil ($/Bbl)
 
$
52.23

 
$
52.19

 
$
54.27

 
$
57.90

 
$
59.52

   NGL ($/Bbl)(1)
 
$
19.36

 
$
21.14

 
$
23.93

 
$
28.21

 
$
30.34

   Natural gas ($/MMBtu)
 
$
0.58

 
$
0.87

 
$
0.85

 
$
1.14

 
$
1.58

Realized Prices:
 
 
 
 
 
 
 
 
 
 
   Oil ($/Bbl)
 
$
52.47

 
$
52.12

 
$
52.86

 
$
55.69

 
$
56.72

   NGL ($/Bbl)
 
$
10.47

 
$
12.21

 
$
14.78

 
$
18.64

 
$
20.46

   Natural gas ($/Mcf)
 
$
0.28

 
$
0.53

 
$
0.52

 
$
0.70

 
$
1.09

_____________________________________________________________________________
(1)
Based on the Company's average composite NGL barrel.
The following table presents full cost ceiling impairment expense, which is included in "Impairment expense" on the unaudited consolidated statements of operations for the periods presented:
 
 
Three months ended March 31,
(in thousands)
 
2020
 
2019
Full cost ceiling impairment expense
 
$
16,733

 
$
—