Asset Retirement Obligation

9 Months Ended

Sep. 30, 2013

Asset Retirement Obligation [Abstract]

Asset Retirement Obligation

ASSET RETIREMENT OBLIGATIONS

The following table describes the changes to the Company’s asset retirement obligation liability for the following periods:

	Nine Months Ended
	September 30,
	2013			2012
Asset retirement obligation, beginning of period	$	2,145,000		$	1,104,000
Additional liability incurred	162,000			145,000
Liabilities acquired	471,000			—
Liabilities settled	(14,000		)	—
Accretion expense	134,000			63,000
Asset retirement obligation, end of period	2,898,000			1,312,000
Less current portion	20,000			19,000
Asset retirement obligations - long-term	$	2,878,000		$	1,293,000

The Company’s asset retirement obligations primarily relate to the future plugging and abandonment of wells and related facilities. The Company estimates the future plugging and abandonment costs of wells, the ultimate productive life of the properties, a risk-adjusted discount rate and an inflation factor in order to determine the current present value of this obligation. To the extent future revisions to these assumptions impact the present value of the existing asset retirement obligation liability, a corresponding adjustment is made to the oil and natural gas property balance.