NOTE 4.

OIL AND NATURAL GAS PROPERTIES

Oil and natural gas properties includes the following (in thousands):

	December 31, 2015			December 31, 2014
Oil and natural gas properties:
Subject to depletion	$	1,627,367		$	1,248,376
Not subject to depletion
Incurred in 2015		118,101			—
Incurred in 2014		459,505			562,046
Incurred in 2013 and prior		41,188			62,194
Total not subject to depletion		618,794			624,240
Gross oil and natural gas properties		2,246,161			1,872,616
Less accumulated depreciation and depletion		(290,186	)		(128,044	)
Oil and natural gas properties, net		1,955,975			1,744,572
Other property and equipment		37,253			19,177
Less accumulated depreciation		(7,475	)		(2,887	)
Other property and equipment, net		29,778			16,290
Property and equipment, net	$	1,985,753		$	1,760,862

As the Company’s exploration and development work progresses and the reserves on the Company’s properties are proven, capitalized costs attributed to the properties are subject to DD&A. Depletion of capitalized costs is provided using the units-of-production method based on proved oil and gas reserves related to the associated reservoir. Costs subject to depletion are proved costs and costs not subject to depletion are unproved costs. At December 31, 2015 and 2014, the Company had excluded $618.8 million and $624.2 million of capitalized costs from depletion, respectively. Depletion expense on capitalized oil and gas property was $173.6 million, $92.8 million and $27.1 million for the years ended December 31, 2015, 2014, and 2013, respectively. The Company had no exploratory wells in progress at December 31, 2015, 2014, and 2013.

The Company capitalizes interest on expenditures made in connection with long term projects that are not subject to current depletion. Interest is capitalized only for the period that activities are in progress to bring these projects to their intended use and only to the extent the company has incurred interest expense. There was no capitalized interest recorded during 2015. During the years ended December 31, 2014 and 2013, the Company capitalized interest of $2.7 million and $3.4 million, respectively.