Asset Retirement Obligation

12 Months Ended

Dec. 31, 2015

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, 2015 and 2014:


	2015		2014
	(In millions)
Asset retirement obligation at beginning of year	$	3,085	$	3,222
Liabilities incurred		68		171
Liabilities divested		(623)		(471)
Liabilities settled		(90)		(146)
Accretion expense		158		181
Revisions in estimated liabilities		-		128

Asset retirement obligation at end of year		2,598		3,085
Less current portion		(36)		(37)

Asset retirement obligation, long-term	$	2,562	$	3,048

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 2015 and 2014 includes discontinued operations of $13 million and $27 million, respectively, which are included in “Net income (loss) from discontinued operations, net of tax” on the statement of consolidated operations.

During 2015 and 2014, the Company recorded $68 million and $171 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.