Asset Retirement Obligations

12 Months Ended

Dec. 31, 2014

Asset Retirement Obligation Disclosure [Abstract]

Asset Retirement Obligations

Asset Retirement Obligations

The Company has the obligation to plug and abandon oil and natural gas wells and related equipment at the end of production operations. Estimated asset retirement costs are recognized as liabilities with an increase to the carrying amounts of the related long-lived assets when the obligation is incurred. The liabilities are included in “other accrued liabilities” and “other noncurrent liabilities” on the balance sheets. Accretion expense is included in “depreciation, depletion and amortization” on the statements of operations. The fair value of additions to the asset retirement obligations is estimated using valuation techniques that convert future cash flows to a single discounted amount. Significant inputs to the valuation include estimates of: (i) plug and abandon costs per well based on existing regulatory requirements; (ii) remaining life per well; (iii) future inflation factors; and (iv) a credit-adjusted risk-free interest rate. These inputs require significant judgments and estimates by the Company’s management at the time of the valuation and are the most sensitive and subject to change.

The following presents a reconciliation of the Company’s asset retirement obligations:

	Successor					Predecessor
	Year Ended December 31, 2014			December 17, 2013 through December 31, 2013		January 1, 2013 through December 16, 2013
(in thousands)
Asset retirement obligations at beginning of period (1)	$	94,830		$	94,612	$	86,746
Liabilities added from drilling	5,124			—		10,097
Settlements	(5,260		)	—		(3,882		)
Liabilities added from acquisitions	25,223			—		—
Liabilities associated with assets divested	(5,460		)	—		(40		)
Current year accretion expense	5,670			218		7,136
Revision of estimates	1,633			—		5,900
Asset retirement obligations at end of period	$	121,760		$	94,830	$	105,957

⁽¹⁾  As a result of the application of pushdown accounting, the Company remeasured its asset retirement obligations on the LINN Energy transaction date.