Asset Retirement Obligations

3 Months Ended

Mar. 31, 2012

Asset Retirement Obligations [Abstract]

Note 4 – Asset Retirement Obligations

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 gas and oil wells, production facilities 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 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. Income or expense resulting from the settlement of ARO liabilities is included in “Net gain from asset sales” in the Condensed Consolidated Statements of Income. Changes in ARO were as follows:

	Asset Retirement Obligations
	2012			2011
	(in millions)
ARO liability at January 1,	$	163.9		$	148.3
Accretion		2.5			2.3
Liabilities incurred		1.6			2.0
Liabilities settled		(0.3	)		(0.2	)
ARO liability at March 31,	$	167.7		$	152.4

- Definition

The entire disclosure for an asset retirement obligation and the associated long-lived asset. An asset retirement obligation is a legal obligation associated with the disposal or retirement from service of a tangible long-lived asset that results from the acquisition, construction or development, or the normal operations of a long-lived asset, except for certain obligations of lessees.

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