ASSET RETIREMENT OBLIGATIONS

12 Months Ended

Dec. 31, 2017

Asset Retirement Obligation Disclosure [Abstract]

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, adjusted for inflation, 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, 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
Liabilities incurred	230
Liabilities settled	(758		)
Accretion expense	6,672
Revisions in estimated cash flows	(12,875		)
Reclassification associated with held for sale properties**	(1,715		)
Balance as of December 31, 2016	81,544
Liabilities incurred	1,354
Liabilities settled	(351		)
Accretion expense	5,831
Balance as of December 31, 2017	$	88,378

*Asset retirement obligation associated with certain San Juan Basin properties related to assets held for sale.

**Adjustment to the reclassification of the asset retirement obligation associated with a series of asset sales of certain non-core Permian Basin Assets in the Delaware Basin in Texas and in the San Juan Basin in New Mexico.