Asset Retirement Obligations

12 Months Ended

Dec. 31, 2011

Asset Retirement Obligations [Abstract]

Asset Retirement Obligations

Note 7—Asset Retirement Obligations

The Company accounts for asset retirement obligations in accordance with ASC Topic 410-20, which requires recording the fair value of an asset retirement obligation associated with tangible long-lived assets in the period incurred. Asset retirement obligations associated with long-lived assets included within the scope of ASC Topic 410-20 are those for which there is a legal obligation to settle under existing or enacted law, statute, written or oral contract or by legal construction under the doctrine of promissory estoppel. The Company has legal obligations to plug, abandon and dismantle existing wells and facilities that it has acquired and constructed.

The following table summarizes the changes to the Company’s asset retirement obligation liability (in thousands):

		September 30,			September 30,
	Years Ended December 31,
	2011			2010
Asset retirement obligation, beginning of period	$	24,592		$	23,916
Liabilities incurred		220			275
Liabilities settled		(905	)		(7,362	)
Accretion expense		2,049			1,306
Revisions in estimates		4,471			6,457
Asset retirement obligation, end of period		30,427			24,592
Less: current portion of asset retirement obligation		(3,110	)		(1,517	)
Long-term asset retirement obligation	$	27,317		$	23,075

Liabilities settled during 2010 included two offshore fields that were completely decommissioned and the liability for an additional offshore platform in the amount of $1.1 million that was transferred to a third party related to a farmout, which represents a non-cash investing activity for purposes of the Statement of Cash Flows. Revisions in estimates during 2011 and 2010 primarily represent increased cost estimates to decommission the Company’s offshore fields including platforms and pipelines and to plug and abandon the related wells.