NOTE 6 – ASSET RETIREMENT OBLIGATIONS

The estimated liability for asset retirement obligations was based on our historical experience in plugging and abandoning wells, the 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 was discounted using an assumed credit-adjusted risk-free interest rate. Revisions to the liability could occur due to changes in estimates of plugging and abandonment costs or remaining lives of the wells, or if federal or state regulators enact new plugging and abandonment requirements. We have no assets legally restricted for purposes of settling asset retirement obligations. Except for our gas and oil properties, we determined that there were no other material retirement obligations associated with tangible long-lived assets.

We proportionately consolidate our ownership interest of the asset retirement obligations of our Drilling Partnerships. At December 31, 2016, the Drilling Partnerships had $18.5 million of aggregate asset retirement obligation liabilities recognized on their combined balance sheets allocable to the limited partners, exclusive of our proportional interest in such liabilities. Under the terms of the respective partnership agreements, we maintain the right to retain a portion or all of the distributions to the limited partners of our Drilling Partnerships to cover the limited partners’ share of the plugging and abandonment costs up to a specified amount per month. As of December 31, 2016, we have withheld $1.8 million of limited partner distributions related to the asset retirement obligations of certain Drilling Partnerships. Our historical practice and continued intention is to retain distributions from the limited partners as the wells within each Drilling Partnership near the end of their useful life. On a partnership-by-partnership basis, we assess our right to withhold amounts related to plugging and abandonment costs based on several factors including commodity price trends, the natural decline in the production of the wells, and current and future costs. Generally, our intention is to retain distributions from the limited partners as the fair value of the future cash flows of the limited partners’ interest approaches the fair value of the future plugging and abandonment cost. Upon our decision to retain all future distributions to the limited partners of our Drilling Partnerships, we will assume the related asset retirement obligations of the limited partners.

A reconciliation of our liability for well plugging and abandonment costs for the periods indicated is as follows (in thousands):

	Successor			Predecessor
	Period from September 1, 2016 through December 31, 2016			Period from January 1, 2016 through August 31, 2016		Year Ended December 31, 2015			Year Ended December 31, 2014
Asset retirement obligations, beginning of period	$	58,868		$	113,740	$	107,950		$	91,179
Liabilities incurred		14,671			12,458		2,070			3,512
Adjustment to liability due to acquisitions (Note 4)		—			—		—			6,997
Liabilities settled		(399	)		139		(2,591	)		(1,664	)
Accretion expense		2,207			4,598		6,311			5,747
Revisions		—			—		—			2,179
Asset retirement obligations, end of period	$	75,347		$	130,935	$	113,740		$	107,950

The above accretion expense was included in depreciation, depletion and amortization our consolidated statements of operations. The above liabilities incurred in the Successor and Predecessor periods of 2016 are primarily additions to our asset retirement obligations due to the consolidation of some of our Drilling Partnerships during the respective periods.