Asset Retirement Obligations

9 Months Ended

Sep. 30, 2019

Asset Retirement Obligation Disclosure [Abstract]

Note 4—Asset Retirement Obligations

The following table summarizes the changes in the Company’s asset retirement obligations (“ARO”) associated with our working interests in oil and gas properties for the nine months ended September 30, 2019:



(in thousands)
Asset retirement obligations as of January 1, 2019	$	13,895
Liabilities acquired	101
Liabilities incurred	1,075
Liabilities divested and settled	(1,112		)
Accretion expense	670
Asset retirement obligations as of September 30, 2019	$	14,629

ARO reflect the present value of the estimated future costs associated with the plugging and abandonment of oil and natural gas wells, removal of equipment and facilities from leased acreage and land restoration in accordance with applicable local, state and federal laws. Inherent in the fair value calculation of ARO are numerous assumptions and judgments including the ultimate plug and abandonment settlement amounts, inflation factors, credit adjusted discount rates and timing of settlement. To the extent future revisions to these assumptions impact the value of the existing ARO liability, a corresponding offsetting adjustment is made to the oil and gas property balance. Changes in the liability due to the passage of time are recognized as an increase in the carrying amount of the liability and as accretion expense.