Asset Retirement Obligations

3 Months Ended

Mar. 31, 2012

Asset Retirement Obligations [Abstract]

Asset Retirement Obligations

NOTE 6 – 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 the plugging costs associated with our oil and gas wells.

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

	Three Months Ended March  31,
	2012			2011
	(In thousands)
ARO liability, January 1:	$	96,446		$	69,265
Accretion of discount		1,101			874
Liability incurred		1,204			1,559
Liability settled		(1,052	)		(359	)
Revision of estimates		(5,050	)(1)		(1	)
ARO liability, March 31:		92,649			71,338
Less current portion		2,904			1,836
Total long-term plugging liability	$	89,745		$	69,502

(1) 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.