Asset Retirement Obligation

9 Months Ended

Sep. 30, 2012

8. Asset Retirement Obligation

The Company records a liability for the estimated costs to be incurred in connection with the abandonment of oil and natural gas properties in the future. This liability is included in the caption “other” in the liabilities section of the consolidated balance sheet. The following table describes the changes to the Company’s asset retirement obligations during the nine months ended September 30, 2012 and 2011 (in thousands):


	Nine Months Ended September 30,
	2012			2011
Balance at beginning of year	$	3,455		$	3,063
Liabilities incurred		288			223
Liabilities settled		(106	)		(80	)
Accretion expense		121			106
Revision in estimated costs of plugging oil and natural gas wells		536			(2	)

Asset retirement obligation at end of period	$	4,294		$	3,310

- Definition

The entire disclosure for an asset retirement obligation and the associated long-lived asset. An asset retirement obligation is a legal obligation associated with the disposal or retirement from service of a tangible long-lived asset that results from the acquisition, construction or development, or the normal operations of a long-lived asset, except for certain obligations of lessees.

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