Asset Retirement Obligations

12 Months Ended

Dec. 31, 2011

Asset Retirement Obligations [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:

	2011			2010
	(In thousands)
ARO liability, January 1:	$	69,265		$	56,404
Accretion of discount		3,838			2,937
Liability incurred		15,068	(1)		4,768
Liability settled		(1,009	)		(763	)
Revision of estimates		9,284	(2)		5,919	(2)
ARO liability, December 31:		96,446			69,265
Less current portion		3,040			1,915
Total long-term ARO liability	$	93,406		$	67,350

(1) Liability incurred in 2011 includes new wells acquired.

(2) Plugging liability estimates were revised upward in both 2011 and 2010 due to increases in the cost of services used to plug wells over the preceding years.