Asset Retirement Obligations

3 Months Ended

Mar. 31, 2019

Asset Retirement Obligation Disclosure [Abstract]

Our asset retirement obligations (“AROs”) consist of estimated costs for subsea infrastructure plugging and abandonment activities. The estimated costs are discounted to present value using a credit-adjusted risk-free discount rate. After its initial recognition, an ARO liability is increased for the passage of time as accretion expense, which is a component of our depreciation and amortization expense. An ARO liability may also change based on revisions in estimated costs and/or timing to settle the obligations.

The following table describes the changes in our AROs (both current and long-term) (in thousands):



AROs at January 1, 2019	$	—
Liability incurred during the period ⁽¹⁾	53,294
Accretion expense	488
AROs at March 31, 2019	$	53,782

(1)

In connection with the acquisition on January 18, 2019 of certain assets related to the Droshky Prospect (Note 2), we assumed the AROs for the required plug and abandonment of those assets in exchange for agreed-upon amounts to be paid by Marathon Oil as the plugging and abandonment work is completed. We recognized $53.3 million of ARO liability, $50.8 million of receivables and $2.5 million of acquired property for this transaction.