ASSET RETIREMENT OBLIGATION

3 Months Ended

Mar. 31, 2017

NOTE 8—ASSET RETIREMENT OBLIGATION

For the purpose of determining the fair value of the asset retirement obligation incurred during the three months ended March 31, 2017, the Company assumed an inflation rate of 2.0%, an estimated average asset life of 33.0 years, and a credit-adjusted risk free interest rate of 11.26%.

The following reconciles the value of the asset retirement obligation for the periods presented:

	March 31, 2017			December 31, 2016
Asset retirement obligation, beginning of year	$	945,419		$	34,776
Liabilities settled		(9,475	)		1,990
Liabilities incurred		5,804			878,170
Revisions in estimated liabilities		—			—
Accretion		22,667			30,483

Asset retirement obligation, end of year	$	964,415		$	945,419

Accretion expense recorded for the three months ended March 31, 2017 and 2016 was $22,667 and $841, respectively.