Asset Retirement Obligations

6 Months Ended

Jun. 30, 2014

Asset Retirement Obligation [Abstract]

QEP records asset retirement obligations (ARO) when there are legal obligations associated with the retirement of tangible long-lived assets. The Company's ARO liability applies primarily to abandonment costs associated with oil and gas wells, production facilities, midstream assets, and certain other properties. The fair values of such costs are estimated by Company personnel based on abandonment costs of similar assets and depreciated over the life of the related assets. Revisions to the ARO estimates result from changes in expected cash flows or material changes in estimated asset retirement costs. The ARO liability is adjusted to present value each period through an accretion calculation using a credit-adjusted risk-free interest rate. Of the $189.5 million and $193.6 million ARO liability for the periods ended June 30, 2014 and December 31, 2013, $1.0 million and $1.8 million was included, respectively, as a current liability in "Accounts payable and accrued expenses" on the Condensed Consolidated Balance Sheets.

The following is a reconciliation of the changes in the Company's ARO for the periods specified below:



	Asset Retirement Obligations
	2014
	(in millions)
ARO liability at January 1,	$	193.6
Accretion	4.4
Additions⁽¹⁾	13.2
Revisions	(0.4		)
Liabilities settled⁽²⁾	(21.3		)
ARO liability at June 30,	$	189.5

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⁽¹⁾Additions include $9.7 million related to the Permian Basin Acquisition.

⁽²⁾ Settlements include $20.0 million related to the property sales in the second quarter of 2014 (see Note 3 - Acquisitions and Divestitures).