Asset Retirement Obligations

9 Months Ended

Sep. 30, 2014

Asset Retirement Obligation Disclosure [Abstract]

We record asset retirement obligations (“ARO”) associated with the retirement of our long-lived assets in the period in which they are incurred and become determinable. Under this method, we record a liability for the expected future cash outflows discounted at our credit-adjusted risk-free interest rate for the dismantlement and abandonment costs, excluding salvage values, of each oil and gas property. We also record an asset retirement cost to the oil and gas properties equal to the ARO liability. The fair value of the asset retirement cost and the ARO liability is measured using primarily Level 3 inputs. The significant unobservable inputs to this fair value measurement include estimates of plugging, abandonment and remediation costs, inflation rate and well life. The inputs are calculated based on historical data as well as current estimated costs. Accretion of the liability is recognized each period using the interest method of allocation, and the capitalized cost is depleted over the useful life of the related asset.

The following table reflects the changes in ARO during the nine months ended September 30, 2014 and the year ended December 31, 2013:



	September 30, 2014			December 31, 2013
	(In thousands)
Beginning of period	$	49,981		$	51,477
Additional ARO from new properties	692			795
Sales or abandonments of properties	(4,375		)	(5,892		)
Accretion expense	2,723			4,203
Revisions of previous estimates	(3,798		)	(602		)
End of period	$	45,223		$	49,981