Asset Retirement Obligations

9 Months Ended

Sep. 30, 2023

Asset Retirement Obligation Disclosure [Abstract]

Asset Retirement Obligations

Note 13 — Asset Retirement Obligations

Our asset retirement obligations (“AROs”) relate to mature offshore oil and gas properties that we acquired with the intention to perform decommissioning work at the end of their life cycles. AROs are recorded initially at fair value and consist of estimated costs for subsea infrastructure decommissioning and P&A activities associated with our oil and gas properties. 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.

In August 2022, we acqured from MP Gulf of Mexico, LLC (“MP GOM”), a joint venture controlled by Murphy Exploration & Production Company – USA, all of MP GOM’s 62.5% interest in the Thunder Hawk Field, in exchange for the assumption of MP GOM’s abandonment obligations (initially estimated at $23.6 million). Our AROs also include P&A costs associated with our Droshky oil and gas properties (Note 4). The following table describes the changes in our AROs (in thousands):

	2023		2022
AROs at January 1,	$	51,956	$	29,658
Liability incurred during the period		—		23,601
Accretion expense		3,586		1,465
AROs at September 30,	$	55,542	$	54,724