ASSET RETIREMENT OBLIGATIONS

6 Months Ended

Jun. 30, 2023

ASSET RETIREMENT OBLIGATIONS

ASSET RETIREMENT OBLIGATIONS

8. ASSET RETIREMENT OBLIGATIONS

The Company records an asset retirement obligation (ARO) on oil and natural gas properties when it can reasonably estimate the fair value of an obligation to perform site reclamation, dismantle facilities or plug and abandon costs. The Company records the ARO liability on the unaudited condensed consolidated balance sheets and capitalizes the cost in “Oil and natural gas properties” during the period in which the obligation is incurred. The Company records the accretion of its ARO liabilities in “Depletion, depreciation and accretion” expense in the unaudited condensed consolidated statements of operations. The additional capitalized costs are depreciated on a unit-of-production basis.

The Company recorded the following activity related to its ARO liability (in thousands):

Liability for asset retirement obligations as of December 31, 2022	$	15,469
Accretion expense		372
Liabilities incurred during the period		11
Liability for asset retirement obligations as of June 30, 2023		15,852