Asset Retirement Obligation

3 Months Ended

Mar. 31, 2024

Asset Retirement Obligation [Abstract]

Note 8 – ASSET RETIREMENT OBLIGATION

The Company records the fair value of its estimated liability to retire its oil and natural gas producing properties in the period in which it is incurred (typically the date of first sale). The estimated liability is calculated by obtaining current estimated plugging costs from the well operators and inflating it over the life of the property. Current year inflation rate used is 2.50%. When the liability is first recorded, a corresponding increase in the carrying amount of the related long-lived asset is also recorded. Subsequently, the asset is amortized to expense over the life of the property and the liability is increased annually for the change in its present value which is currently 7.50%.

A reconciliation of the Company’s asset retirement obligation liability is as follows:


Balance at December 31, 2023	$	2,566,368
Revision to estimate	(387,374)
Accretion expense	41,029
Balance at March 31, 2024	$	2,220,023