Decommissioning Liabilities

3 Months Ended

Mar. 31, 2012

Decommissioning Liabilities [Abstract]

Decommissioning Liabilities

(10) Decommissioning Liabilities

The Company records estimated future decommissioning liabilities in accordance with the authoritative guidance related to asset retirement obligations (decommissioning liabilities), which requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred, with a corresponding increase in the carrying amount of the related long-lived asset. Subsequent to initial measurement, the decommissioning liability is required to be accreted each period to present value.

The Company’s decommissioning liabilities associated with the Bullwinkle platform and its related assets consist of costs related to the plugging of wells, the removal of the related facilities and equipment, and site restoration. Whenever practical, the Company utilizes its own equipment and labor services to perform well abandonment and decommissioning work. When the Company performs these services, all recorded intercompany revenues and related costs of services are eliminated in the consolidated financial statements. The recorded decommissioning liability associated with a specific property is fully extinguished when the property is abandoned. The recorded liability is first reduced by all cash expenses incurred to abandon and decommission the property. If the recorded liability exceeds (or is less than) the Company’s total costs, then the difference is reported as income (or loss) within revenue during the period in which the work is performed.

The Company reviews the adequacy of its decommissioning liabilities whenever indicators suggest that the estimated cash flows needed to satisfy the liability have changed materially. The Company reviews its estimates for the timing of these expenditures on a quarterly basis.

In connection with the acquisition of Complete in February 2012, the Company assumed approximately $3.6 million of decommissioning liabilities associated with costs to plug saltwater disposal wells at the end of the service lives of the assets, as well as other retirement commitments.

The following table summarizes the activity for the Company’s decommissioning liabilities for the three month periods ended March 31, 2012 and 2011 (in thousands):

	2012			2011
Decommissioning liabilities, December 31, 2011 and 2010, respectively	$	123,176		$	117,716
Liabilities acquired and incurred		3,573			—
Liabilities settled		(2,661	)		—
Accretion		1,741			1,668
Total decommissioning liabilities, March 31, 2012 and 2011, respectively		125,829			119,384
Less: current portion of decommissioning liabilities at March 31, 2012 and 2011, respectively		15,678			17,063
Long-term decommissioning liabilities, March 31, 2012 and 2011, respectively	$	110,151		$	102,321