Asset Retirement Obligations

12 Months Ended

Dec. 31, 2015

Asset Retirement Obligation Disclosure [Abstract]

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



	December 31,
	2015			2014
	(in thousands)

Asset retirement obligations at beginning of year	$	121,760		$	94,830
Liabilities added from drilling	1,270			5,124
Settlements	(683		)	(5,260		)
Liabilities added from acquisitions	—			25,223
Liabilities associated with assets divested	—			(5,460		)
Current year accretion expense	6,897			5,670
Revision of estimates	8,319			1,633
Asset retirement obligations at end of year	$	137,563		$	121,760