Asset Retirement Obligations

9 Months Ended

Sep. 30, 2019

Asset Retirement Obligation Disclosure [Abstract]

Asset Retirement Obligation

The Company has the obligation to plug and remediate its saltwater disposal wellsites when the assets are to be retired. This asset retirement obligation ("ARO") includes plugging inactive assets, removal of surface equipment, and returning the land to its original state. The Company records a liability for the fair value of asset retirement obligations ("AROs") that we can reasonably estimate, on a discounted basis, in the period in which the asset is acquired. The fair value of the liability is calculated using discounted cash flow techniques and based on internal estimates and assumptions related to (i) future retirement costs, (ii) expected remaining lives of the assets (iii) future inflation rates, and (iv) credit adjusted risk-free interest rates. Significant increases or decreases in these assumptions could result in a significant change to the fair value measurement. During the quarter ended September 30, 2019, Basic revised our estimated ARO liability upward by $6.4 million based on updated data gathered from increasing plugging and abandoning activity incurred during 2019.

The following table presents activity in our AROs (in thousands):


	Nine Months Ended September 30,
	2019
Balance as of January 1, 2019	$	2,587
Additions	280
Revision in estimate	6,140
Disposals	(124)
Expenditures	(159)
Accretion expense	607
Balance as of September 30, 2019	$	9,331