Asset Retirement Obligations

3 Months Ended

Mar. 31, 2023

Asset Retirement Obligation Disclosure [Abstract]

Note 5—Asset Retirement Obligations

The following table summarizes changes in the Company’s asset retirement obligations (“ARO”) associated with its working interests in oil and gas properties for the three months ended March 31, 2023:


(in thousands)
Asset retirement obligations, beginning of period	$	40,947
Liabilities incurred	601
Liabilities acquired	5,260
Liabilities divested and settled	(878)
Accretion expense	683
Revisions to estimated cash flows	—
Asset retirement obligations, end of period	$	46,613

ARO reflect the present value of the estimated future costs associated with the plugging and abandonment of oil and 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 estimates and assumptions, including 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 liabilities, 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 with an offsetting charge to accretion expense, which is included within depreciation, depletion and amortization.