Asset Retirement Obligation

12 Months Ended

Dec. 31, 2014

Asset Retirement Obligation Disclosure [Abstract]

5. ASSET RETIREMENT OBLIGATION

The following table describes changes to the Company’s asset retirement obligation (ARO) liability for the years ended December 31, 2014 and 2013:


	2014			2013
	(In millions)
Asset retirement obligation at beginning of year	$	3,222		$	4,578
Liabilities incurred		171			481
Liabilities acquired		—			53
Liabilities divested		(471	)		(1,692	)
Liabilities settled		(146	)		(497	)
Accretion expense		181			243
Revisions in estimated liabilities		128			56

Asset retirement obligation at end of year		3,085			3,222
Less current portion		(37	)		(121	)

Asset retirement obligation, long-term	$	3,048		$	3,101

The ARO liability reflects the estimated present value of the amount of dismantlement, removal, site reclamation, and similar activities associated with Apache’s oil and gas properties. The Company utilizes current retirement costs to estimate the expected cash outflows for retirement obligations. The Company estimates 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 ARO liability, a corresponding adjustment is made to the oil and gas property balance.

Accretion expense for 2013 includes Argentina discontinued operations of $5 million, which is included in Net income (loss) from discontinued operations, net of tax.

During 2014 and 2013, the Company recorded $171 million and $481 million, respectively, in abandonment liabilities resulting from Apache’s active exploration and development capital program. Liabilities settled primarily relate to individual properties, platforms, and facilities plugged and abandoned during the period.