Asset Retirement Obligations

12 Months Ended

Jun. 30, 2022

Asset Retirement Obligations

Asset Retirement Obligations

Note 10. Asset Retirement Obligations

The Company’s ARO represents the estimated present value of the amount expected to be incurred to plug, abandon, and remediate its oil and natural gas properties at the end of their productive lives in accordance with applicable laws and regulations. The Company records the ARO liability on the consolidated balance sheets and capitalizes the cost in “Oil and natural gas properties, net” during the period in which the obligation is incurred. The Company records the accretion of its ARO liabilities in “Depletion, depreciation and amortization” expense in the consolidated statements of operations.

The following is a reconciliation of the activity related to the Company’s ARO liability (inclusive of the current portion) for the years ended June 30, 2022 and 2021 (in thousands):

	Years Ended
	June 30, 2022		June 30, 2021
Asset retirement obligations — beginning of period	$	5,583	$	2,589
Liabilities incurred		219		—
Liabilities settled(1)		(17)		(99)
Liabilities acquired(2)		5,400		2,806
Accretion of discount		531		210
Revisions of previous estimates(3)		2,205		77
Asset retirement obligations — end of period		13,921		5,583
Less: current asset retirement obligations		(22)		(44)
Long-term portion of asset retirement obligations	$	13,899	$	5,539

(1) Primarily related to abandonment of one Delhi Field and one Hamilton Dome Field well for the year ended June 30, 2022 and abandonment of two non-scheduled Delhi Field wells for the year ended June 30, 2021.

(2) Liabilities acquired during the years ended June 30, 2022 and 2021 were primarily due to the Jonah Field Acquisition and the Williston Basin Acquisition in 2022, and the Barnett Shale Acquisition in 2021. See Note 4, “Acquisitions,” for additional information on the Company’s acquisition activities.

(3) Primarily related to upward revisions for increased estimates for the year ended June 30, 2022 and two difficult-to-plug Delhi Field wells for the year ended June 30, 2021.