| Oil and Natural Gas Interests |
OIL AND NATURAL GAS INTERESTS
Oil and natural gas interests include the following: | | | | | | | | | June 30, | December 31, | | 2019 | 2018 | | | | | (in thousands) | Oil and natural gas interests: | | | Subject to depletion | $ | 909,093 |
| $ | 845,228 |
| Not subject to depletion | 932,938 |
| 871,485 |
| Gross oil and natural gas interests | 1,842,031 |
| 1,716,713 |
| Accumulated depletion and impairment | (281,007 | ) | (248,296 | ) | Oil and natural gas interests, net | 1,561,024 |
| 1,468,417 |
| Land | 5,688 |
| 5,688 |
| Property, net of accumulated depletion and impairment | $ | 1,566,712 |
| $ | 1,474,105 |
| | | | Balance of costs not subject to depletion: | | | Incurred in 2019 | $ | 106,811 |
| | Incurred in 2018 | 464,763 |
| | Incurred in 2017 | 284,371 |
| | Incurred in 2016 | 76,993 |
| | Total not subject to depletion | $ | 932,938 |
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Costs associated with unevaluated interests are excluded from the full cost pool until a determination as to the existence of proved reserves is able to be made. The inclusion of the Partnership’s unevaluated costs into the amortization base is expected to be completed within three years to five years.
Under the full cost method of accounting, the Partnership is required to perform a ceiling test each quarter. The test determines a limit, or ceiling, on the book value of the proved oil and gas interests. Net capitalized costs are limited to the lower of unamortized cost or the cost center ceiling. The cost center ceiling is defined as the sum of (a) estimated future net revenue including estimated expenditures (based on current costs) to be incurred in developing and producing the proved reserves, discounted at 10% per annum, from proved reserves, based on the trailing 12-month unweighted average of the first-day-of-the-month price, adjusted for any contract provisions or financial derivatives, if any, that hedge the Partnership’s oil and natural gas revenue, (b) the cost of interests not being amortized, if any, and (c) the lower of cost or market value of unproved interests included in the cost being amortized. If the net book value exceeds the ceiling, an impairment or non-cash write down is required.
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