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Asset Retirement Obligation

6 Months Ended

Jun. 30, 2011

6. Asset Retirement Obligation

The following table summarizes the activity for the Company's asset retirement obligation (ARO) for the six months ended June 30, 2011 and 2010:

	Six months ended June 30,

(in thousands)	2011			2010
Beginning balance at January 1	$	53,443		$	43,487
Liabilities incurred		1,642			1,860
Liabilities settled		(864	)		(1,534	)
Liabilities assumed		119			3,309
Accretion expense		2,545			2,191

Ending balance at June 30	$	56,885		$	49,313

ARO reflects the estimated present value of the amount of dismantlement, removal, site reclamation and similar activities associated with the Company's oil and gas properties. Inherent in the fair value calculation of ARO are numerous assumptions and judgments including the ultimate settlement amounts, inflation factors, credit adjusted discount rates, timing of settlement and changes in the legal, regulatory, environmental and political environments. To the extent future revisions to these assumptions impact the fair value of the existing ARO liability, a corresponding adjustment is made to the oil and gas property balance.

- Definition

The entire disclosure for an asset retirement obligation and the associated long-lived asset. An asset retirement obligation is a legal obligation associated with the disposal or retirement from service of a tangible long-lived asset that results from the acquisition, construction or development, or the normal operations of a long-lived asset, except for certain obligations of lessees.

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