ASSET IMPAIRMENT

Impairments recognized by Energen are presented below:



	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2015		2014		2015		2014
Continuing operations:
Permian Basin oil properties
Central Basin Platform	$	371,593	$	—	$	423,067	$	—
Delaware Basin	18,653		—		22,983		—
Midland Basin	—		25,776		—		25,776
San Juan Basin properties	—		142,172		—		142,172
Permian Basin unproved leasehold properties	9,148		5,231		20,092		7,818
San Juan Basin unproved leasehold properties	—		5,733		248		5,734
Total asset impairments from continuing operations	399,394		178,912		466,390		181,500
Discontinued operations:
North Louisiana/East Texas oil and natural gas properties	—		—		—		1,667
Total asset impairments from discontinued operations	—		—		—		1,667
Total asset impairments	$	399,394	$	178,912	$	466,390	$	183,167

During the three months ended September 30, 2015, Energen recognized non-cash impairment writedowns on certain properties in the Permian Basin of $390.2 million pre-tax to adjust the carrying amount of these properties to their fair value based on expected future discounted cash flows. Our commodity price assumptions, which are based on the commodity price curve for five years and then escalated at 3 percent through our assumed price caps, declined by approximately 19 percent for oil and 12 percent for natural gas in comparable periods during the quarter. During the second quarter of 2015, Energen recognized non-cash impairment writedowns on certain properties in the Central Basin Platform of $51.5 million pre-tax, to adjust the carrying amount of these properties to their fair value based on expected future discounted cash flows. Estimated future cash flows were revised due to the receipt of an unsolicited offer for these properties. For the year-to-date September 30, 2015, Energen recognized non-cash impairment writedowns on certain properties in the Permian Basin of $446.1 million pre-tax. Non-cash impairment writedowns are reflected in asset impairment on the consolidated income statement.

Energen recognized unproved leasehold writedowns primarily on Permian properties in the Delaware Basin of $9.1 million pre-tax during the third quarter of 2015 and $20.3 million in the year-to-date. These non-cash writedowns are reflected in asset impairment on the consolidated income statement.

During the third quarter of 2014, Energen recognized a non-cash impairment writedown on certain properties in the Permian Basin of $31 million pre-tax to adjust the carrying amount of these properties to their fair value based on expected future discounted cash flows in anticipation of being designated as held for sale.

During the third quarter of 2014, a non-cash impairment writedown of $147.9 million pre-tax was recognized by Energen on certain gas properties in the San Juan Basin to adjust the carrying amount of these properties to their fair value based on expected future discounted cash flows in anticipation of being designated as held for sale. At December 31, 2014, proved reserves associated with Energen’s San Juan Basin properties totaled 69,038 MBOE.

In March 2014, Energen completed the sale of its North Louisiana/East Texas natural gas and oil properties for $30.3 million. The sale had an effective date of December 1, 2013, and the proceeds from the sale were used to repay short-term obligations. During the third quarter of 2013, Energen classified these primarily natural gas properties as held for sale and reflected the associated operating results in discontinued operations. Energen recognized a non-cash impairment writedown on these properties in the first quarter of 2014 of $1.7 million pre-tax to adjust the carrying amount of these properties to their fair value based on an estimate of the selling price of the properties. This non-cash impairment writedown was reflected in loss on disposal of discontinued operations in the three months ended March 31, 2014. Significant assumptions in valuing the proved reserves included the reserve quantities, anticipated operating costs, anticipated production taxes, future expected natural gas prices and basis differentials, anticipated production declines, and a discount rate of 10 percent commensurate with the risk of the underlying cash flow estimates. The impairment writedowns are classified as Level 3 fair value. At December 31, 2013, proved reserves associated with Energen’s North Louisiana/East Texas properties totaled 23 Bcf of natural gas and 91 MBbl of oil.