ASSET RETIREMENT OBLIGATIONS

12 Months Ended

Dec. 31, 2022

Asset Retirement Obligation [Abstract]

The Company has asset retirement obligations associated with the future plugging and abandonment of proved properties and related facilities. Initially, the fair value of a liability for an asset retirement obligation (“ARO”) is recorded in the period in which it is incurred and a corresponding increase in the carrying amount of the related long-lived asset. The liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. If the liability is settled for an amount other than the recorded amount, an adjustment to the full cost pool is recognized. The Company has no assets that are legally restricted for purposes of settling asset retirement obligations.

Inherent in the fair value calculation are numerous assumptions and judgments including the ultimate retirement costs, inflation factors, credit-adjusted risk-free discount rates, timing of retirement, and changes in the legal, regulatory, environmental and political environments. To the extent future revisions to these assumptions impact the present value of the existing ARO, a corresponding adjustment is made to the oil and gas property balance. For example, as the Company analyzes actual plugging and abandonment information, the Company may revise its estimate of current costs, the assumed annual inflation of the costs and/or the assumed productive lives of its wells. During 2021, the Company adjusted the assumed productive lives of certain of its wells and during 2022, there were no adjustments to the aforementioned assumptions requiring revisions of previous estimates.

The following table summarizes the Company’s asset retirement obligation transactions recorded during the years ended December 31, 2022 and 2021.


	December 31,
(in thousands)	2022		2021
Beginning Asset Retirement Obligations	$	28,012	$	19,181
Liabilities Acquired During the Period	2,158		8,419
Liabilities Incurred During the Period	1,014		3,075

Revision of Estimates	276		(4,084)
Accretion of Discount on Asset Retirement Obligations	1,980		1,654
Liabilities Settled During the Period	(359)		(234)
Ending Asset Retirement Obligations	$	33,082	$	28,012