Asset retirement obligation

12 Months Ended

Dec. 31, 2012

Asset Retirement Obligation

Asset retirement obligation

Asset retirement obligations ("ARO") relate to oil and natural gas wells in which NXT has outstanding abandonment and reclamation obligations in accordance with government regulations. The Company's obligation relates to its interests in 8 gross (1.1 net) wells that were drilled in the years 2000 through 2004. ARO have an estimated future liability of approximately $62,000 and is based on estimates of the future timing and costs to remediate, reclaim and abandon the wells within the next three years.  The net present value of the ARO is as noted below, and has been calculated using an inflation rate of 3.4% and discounted using a credit-adjusted risk-free interest rate of 10%.

	2012		2011		2010
Asset retirement obligation, beginning of the year	$	57,953	$	54,444	$	51,254
Accretion expense		3,860		3,509		4,092
Costs incurred		-		-		(902	)
Asset retirement obligation, end of the year	$	61,813	$	57,953	$	54,444