We follow the successful efforts method of accounting for our interests in oil and gas properties. Under the successful efforts method, the costs of successful wells and leases containing productive reserves are capitalized. Costs incurred to drill and equip development wells, including unsuccessful development wells, are capitalized. Costs incurred relating to unsuccessful exploratory wells are charged to expense in the period in which the drilling is determined to be unsuccessful.

Exploration and Other

As of March 31, 2012, we capitalized approximately $7.8 million of costs associated with ongoing exploration and/or appraisal activities. Such capitalized costs may be charged against earnings in future periods if management determines that commercial quantities of hydrocarbons have not been discovered or that future appraisal drilling or development activities are not likely to occur.

The following table details the components of exploration expense for the three-month periods ended March 31, 2012 and 2011:


		Three Months Ended
		March 31,
		2012			2011
		(in thousands)
Delay rental and geological and geophysical costs	$	611		$	355
Impairment of unproved properties........................		144			–
Dry hole expense.................................................		(1	)		(9	)
Total exploration expense................................	$	754		$	346

Impairments

No proved property impairments were recorded in the first quarter of 2012 or 2011.

Asset retirement obligations

The following table describes the changes in our asset retirement obligations (both long term and current) since December 31, 2011 (in thousands):

Asset retirement obligations at December 31, 2011 ............	$	254,391
Liability incurred during the period......................................		115
Liability settled during the period........................................		(34,665	)
Other revisions in estimated cash flows..............................		5,755
Accretion expense (included in depreciation and amortization)		3,439
Asset retirement obligations at March 31, 2012...................	$	229,035