Asset Retirement Obligations

Liabilities for legal obligations associated with the retirement obligations of tangible long-lived assets are initially recorded at fair value in the period in which they are incurred. When a liability is initially recorded, the carrying amount of the related asset is increased. The liability is discounted from the expected date of abandonment. Over time, accretion of the liability is recognized each period, and the capitalized cost is amortized on a unit-of-production basis as part of depreciation, depletion, and amortization expense for our oil and gas properties. Upon settlement of the liability, the Company either settles the obligation for its recorded amount or incurs a gain or loss upon settlement which is included in the “Property and Equipment” balance on our accompanying consolidated balance sheets. This guidance requires us to record a liability for the fair value of our dismantlement and abandonment costs, excluding salvage values.

The following provides a roll-forward of our asset retirement obligations (in thousands):



Asset Retirement Obligations as of December 31, 2016	$	32,256
Accretion expense	2,322
Liabilities incurred for new wells and facilities construction	253
Reductions due to sold wells and facilities	(21,466		)
Reductions due to plugged wells and facilities	(2,366		)
Revisions in estimates	(212		)
Asset Retirement Obligations as of December 31, 2017	$	10,787
Accretion expense	419
Liabilities incurred for new wells and facilities construction	93
Reductions due to sold wells and facilities	(6,298		)
Reductions due to plugged wells and facilities	(180		)
Revisions in estimates	(562		)
Asset Retirement Obligations as of December 31, 2018	$	4,259

At December 31, 2018 and 2017, approximately $0.3 million and $2.1 million, respectively, of our asset retirement obligation was classified as a current liability in “Accounts payable and accrued liabilities” on the accompanying consolidated balance sheets. The 2018 reductions due to sold wells and facilities are primarily attributable to the disposition of our assets from our AWP Olmos field while the 2017 reductions due to sold wells and facilities are primarily attributable to the disposition of our assets from our Bay De Chene field.