Asset Retirement Obligations

9 Months Ended

Sep. 30, 2020

Asset Retirement Obligation Disclosure [Abstract]

Asset retirement obligations (“AROs”) are recorded at fair value and consist of estimated costs for subsea infrastructure P&A activities associated with our oil and gas properties. In connection with the acquisition of our Droshky oil and gas properties which we acquired from Marathon Oil in January 2019, we assumed the AROs for the required P&A of those assets in exchange for agreed-upon amounts to be paid by Marathon Oil as the P&A work is completed. The estimated P&A 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 (in thousands):


AROs at January 1, 2020	$	28,258


Other revisions in estimated cash flows	—
Accretion expense	2,021
AROs at September 30, 2020	$	30,279