ASSET RETIREMENT OBLIGATIONS

12 Months Ended

Dec. 31, 2020

11. ASSET RETIREMENT OBLIGATIONS

The Company records an asset retirement obligation (ARO) on oil and natural gas properties when it can reasonably estimate the fair value of an obligation to perform site reclamation, dismantle facilities or plug and abandon costs. The Company records the ARO liability on the consolidated balance sheets and capitalizes the cost in “Oil and natural gas properties” during the period in which the obligation is incurred. The Company records the accretion of its ARO liabilities in “Depletion, depreciation and accretion” expense in the consolidated statements of operations. The additional capitalized costs are depreciated on a unit-of-production basis.

The Company recorded the following activity related to its ARO liability (inclusive of the current portion) (in thousands):


Liability for asset retirement obligations as of December 31, 2018 (Predecessor)	$	6,914
Liabilities settled and divested (1)		(229)
Additions		354
Accretion expense		307
Revisions in estimated cash flows		2,807
Liability for asset retirement obligations as of October 1, 2019 (Predecessor)	$	10,153
Fair Value Adjustment	$	—


Liability for asset retirement obligations as of October 1, 2019 (Successor)	$	10,153
Additions		293
Accretion expense		144
Liability for asset retirement obligations as of December 31, 2019 (Successor)	$	10,590
Liabilities settled and divested (1)		(1,132)
Additions		488
Accretion expense		585
Revisions in estimated cash flows		52
Liability for asset retirement obligations as of December 31, 2020 (Successor)	$	10,583

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See Note 6, “Acquisitions and Divestitures,” for additional information on the Company’s divestiture activities.