Asset Retirement Obligations

12 Months Ended

Dec. 31, 2012

Asset Retirement Obligation Disclosure [Abstract]

Asset Retirement Obligations

NOTE 7 – ASSET RETIREMENT OBLIGATIONS

We are required to record the estimated fair value of the liabilities relating to the future retirement of our long-lived assets (AROs). Our oil and natural gas wells are plugged and abandoned when the oil and natural gas reserves in those wells are depleted or the wells are no longer able to produce. The plugging and abandonment liability for a well is recorded in the period in which the obligation is incurred (at the time the well is drilled or acquired). None of our assets are restricted for purposes of settling these AROs. All of our AROs relate to plugging costs associated with our oil and gas wells.

The following table shows certain information about our AROs for the periods indicated:

	2012				2011
	(In thousands)
ARO liability, January 1:	$	96,446			$	69,265
Accretion of discount	4,615				3,838
Liability incurred	56,650			(1)	15,068
Liability settled	(2,788		)		(1,009		)
Liability Sold	(1,258		)		—
Revision of estimates	(7,506		)	(2)	9,284
ARO liability, December 31:	146,159				96,446
Less current portion	2,953				3,040
Total long-term ARO liability	$	143,206			$	93,406

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(1) The liability incurred increased $46.7 million related to the Noble properties acquired in September 2012.

(2) Plugging liability estimates were revised in March 2012 for updates in the cost of services used to plug wells over the preceding year. Although cost per well increased, a slight decrease in the inflation factor resulted in a decrease in estimated cost. Costs were reviewed each quarter resulting in no change to the March 2012 estimates.