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Asset Retirement Obligations
 12 Months Ended
Dec. 31, 2015
Asset Retirement Obligation Disclosure [Abstract]  
Asset Retirement Obligations
ASSET RETIREMENT OBLIGATIONS
 

Energen’s asset retirement obligations primarily relate to the future plugging, abandonment and reclamation of wells and facilities. We recognize a liability for the fair value of the ARO in the periods incurred. The ARO fair value liability is determined by calculating the present value of the estimated future cash outflows we expect to incur to plug, abandon and reclaim our producing properties at the end of their productive lives, and is recognized on a discounted basis incorporating an estimate of performance risk specific to Energen. Subsequent to initial measurement, liabilities are accreted to their present value and capitalized costs are depreciated over the estimated useful lives of the related assets. Upon settlement of the liability, Energen may recognize a gain or loss for differences between estimated and actual settlement costs.

The following table reflects the components of the change in Energen’s ARO balance:

(in thousands)
 
Balance as of December 31, 2012
$
118,023

Liabilities incurred
2,772

Liabilities settled
(5,525
)
Accretion expense (including discontinued operations of $1,197)
8,192

Reclassification associated with held for sale properties*
(14,929
)
Balance as of December 31, 2013
108,533

Liabilities incurred
2,266

Liabilities settled
(1,543
)
Accretion expense (including discontinued operations of $251)
7,859

Revision in estimated cash flows
692

Reclassification associated with held for sale properties**
(23,747
)
Balance as of December 31, 2014
$
94,060

Liabilities incurred
981

Liabilities settled
(686
)
Accretion expense
7,108

Reclassification associated with held for sale properties***
(11,473
)
Balance as of December 31, 2015
$
89,990


*Asset retirement obligation associated with North Louisiana/East Texas properties.
**Asset retirement obligation associated with certain San Juan Basin properties included as liabilities related to assets held for sale in current liabilities on the balance sheet at December 31, 2014.
***Asset retirement obligation associated with certain San Juan Basin properties included as liabilities related to assets held for sale in current liabilities on the balance sheet at December 31, 2015.