Asset Retirement Obligations

12 Months Ended

Dec. 31, 2011

Asset Retirement Obligations [Abstract]

Asset Retirement Obligations

NOTE K.    Asset Retirement Obligations

The Company's asset retirement obligations primarily relate to the future plugging and abandonment of wells and related facilities. Market risk premiums associated with asset retirement obligations are estimated to represent a component of the Company's credit-adjusted risk-free rate that is utilized in the calculations of asset retirement obligations. The following table summarizes the Company's asset retirement obligation activity during the years ended December 31, 2011, 2010 and 2009:

	Year Ended December 31,
	2011			2010			2009
	(in thousands)
Beginning asset retirement obligations	$	152,291		$	166,434		$	172,433
Liabilities assumed in acquisitions		6			6			—
New wells placed on production		9,233			5,218			625
Changes in estimates (a)		7,490			24,075			40,153
Liabilities reclassified to discontinued operations held for sale		(29,892	)		(5,779	)		—
Disposition of wells		(448	)		(30,693	)		(13,334	)
Liabilities settled		(12,880	)		(17,838	)		(45,010	)
Accretion of discount on continuing operations		8,256			7,945			8,050
Accretion of discount on discontinued operations		2,686			2,923			3,517
Ending asset retirement obligations	$	136,742		$	152,291		$	166,434

(a) The change in the 2011 and 2010 estimates are primarily due to increases in abandonment cost estimates based in part on recent actual costs incurred and a decline in credit-adjusted risk-free discount rates used to value increases in asset retirement obligations. These increases were partially offset by higher oil and NGL prices used to calculate proved reserves at December 31, 2011 and 2010, which had the effect of lengthening the economic life of certain wells and decreasing what would otherwise have been the present value of future retirement obligations. The increase in commodity prices was less substantial in 2011 as compared to 2010. The change in the 2009 estimate is primarily due to (i) lower gas prices used to calculate proved reserves at December 31, 2009, which had the effect of shortening the economic life of wells and increasing the present value of future retirement obligations primarily in the Raton, Hugoton and West Panhandle gas fields and (ii) a $19.9 million increase in East Cameron facilities reclamation and abandonment estimates.

The Company records the current and noncurrent portions of asset retirement obligations in other current liabilities and other liabilities, respectively, in the accompanying consolidated balance sheets. As of December 31, 2011 and 2010, the current portions of the Company's asset retirement obligations were $14.2 million and $19.9 million, respectively.