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Asset Retirement Obligations

3 Months Ended

Mar. 31, 2012

5. Asset Retirement Obligations

For the Company, asset retirement obligations represent the future abandonment costs of tangible assets, such as wells, service assets and other facilities. The fair value of the asset retirement obligation at inception is capitalized as part of the carrying amount of the related long-lived assets. Asset retirement obligations approximated $8.2 million and $7.6 million as of March 31, 2012 and December 31, 2011, respectively.

The liability has been accreted to its present value as of March 31, 2012 and December 31, 2011. The Company evaluated its wells and determined a range of abandonment dates through 2058.

The following table reflects the changes in the Company’s asset retirement obligations for the three months ended March 31, 2012 (in thousands):

Asset retirement obligations at January 1, 2012	$	7,627
Liabilities incurred	442
Revisions	3
Liabilities settled	—
Current period accretion expense	134
Asset retirement obligations at March 31, 2012	$	8,206

- 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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