XML 37 R16.htm IDEA: XBRL DOCUMENT v3.6.0.2
Asset Retirement Obligation
 12 Months Ended
Dec. 31, 2016
Asset Retirement Obligation Disclosure [Abstract]  
Asset Retirement Obligation
ASSET RETIREMENT OBLIGATION
The following table describes changes to the Company’s asset retirement obligation (ARO) liability for the years ended December 31, 2016 and 2015:
 
 
 
2016
 
2015
 
 
(In millions)
Asset retirement obligation at beginning of year
 
$
2,598

 
$
2,952

Liabilities incurred
 
41

 
68

Liabilities divested
 
(7
)
 
(490
)
Liabilities settled
 
(57
)
 
(90
)
Accretion expense
 
156

 
158

Revisions in estimated liabilities
 
(233
)
 
—

Asset retirement obligation at end of year
 
2,498

 
2,598

Less current portion
 
(66
)
 
(36
)
Asset retirement obligation, long-term
 
$
2,432

 
$
2,562


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

During 2016 and 2015, the Company recorded $41 million and $68 million, respectively, in abandonment liabilities resulting from Apache’s exploration and development capital program. Liabilities settled primarily relate to individual properties, platforms, and facilities plugged and abandoned during the period.