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ASSET RETIREMENT OBLIGATION
 12 Months Ended
Dec. 31, 2017
ASSET RETIREMENT OBLIGATION  
ASSET RETIREMENT OBLIGATION

NOTE 7 – ASSET RETIREMENT OBLIGATION

For the purpose of determining the fair value of the asset retirement obligation incurred during the year ended December 31, 2017, the Company assumed an inflation rate of 2.0%, an estimated average asset life of 29.9 years, and a credit-adjusted risk-free interest rate of 11.26% to 14.0%. For the year ended December 31, 2016, the Company assumed an inflation rate of 2.0%, an estimated average life of 13.2 years, and a credit-adjusted risk-free rate of 9.48% to 10.73%.

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

 

 

 

 

 

 

 

 

 

December 31, 

 

 

2017

    

2016

Asset retirement obligation, beginning of period

 

$

945,419

 

$

34,776

Liabilities settled (1)

 

 

(50,163)

 

 

1,990

Liabilities incurred

 

 

91,999

 

 

878,170

Revisions in estimated liabilities

 

 

36,507

 

 

 —

Accretion

 

 

99,682

 

 

30,483

Asset retirement obligation, end of period

 

$

1,123,444

 

$

945,419

                 _________________________

(1)

 Reflects liabilities settled through plugging and abandonment activities and divestitures of properties.

 

Accretion expense recorded for the year ended December 31, 2017 and 2016 was $0.1 million and $30,483, respectively.