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PROPERTY AND EQUIPMENT AND ASSET RETIREMENT OBLIGATION | 12 Months Ended
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Sep. 30, 2011
PROPERTY AND EQUIPMENT AND ASSET RETIREMENT OBLIGATION |
PROPERTY AND EQUIPMENT AND ASSET RETIREMENT OBLIGATION |
6. PROPERTY AND EQUIPMENT AND ASSET RETIREMENT OBLIGATION Barnwell’s property and equipment is detailed as follows:
|  |  |  |  |  | Accumulated |  |
|  |  |  |  |  | Depletion, |  |
|  | Estimated |  | Gross |  | Depreciation, |  | Net
|  | Useful |  | Property and |  | and |  | Property and
|  | Lives |  | Equipment |  | Amortization |  | Equipment
At September 30, 2011: |  |  |  |  |  |  |  |  |  |
Land |  |  |  |  | $ | 863,000 |  |  |  | $ | - |  |  |  | $ | 863,000 |
Oil and natural gas properties (full cost accounting) |  |  |  |  | 224,852,000 |  |  |  | (175,715,000 | ) |  |  | 49,137,000 |
Drilling rigs and equipment |  | 3 – 10 years |  |  | 7,020,000 |  |  |  | (4,988,000 | ) |  |  | 2,032,000 |
Offices |  | 40 years |  |  | 2,420,000 |  |  |  | (203,000 | ) |  |  | 2,217,000 |
Other property and equipment |  | 3 – 17 years |  |  | 3,881,000 |  |  |  | (3,511,000 | ) |  |  | 370,000 |
Total |  |  |  |  | $ | 239,036,000 |  |  |  | $ | (184,417,000 | ) |  |  | $ | 54,619,000 |
|  |  |  |  |  | Accumulated |  |
|  |  |  |  |  | Depletion, |  |
|  | Estimated |  | Gross |  | Depreciation, |  | Net
|  | Useful |  | Property and |  | and |  | Property and
|  | Lives |  | Equipment |  | Amortization |  | Equipment
At September 30, 2010: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Land |  |  |  |  | $ | 365,000 |  |  |  | $ | - |  |  |  | $ | 365,000 |
Oil and natural gas properties (full cost accounting) |  |  |  |  | 214,249,000 |  |  |  | (168,199,000 | ) |  |  | 46,050,000 |
Drilling rigs and equipment |  | 3 – 10 years |  |  | 6,855,000 |  |  |  | (4,479,000 | ) |  |  | 2,376,000 |
Office |  | 40 years |  |  | 1,059,000 |  |  |  | (145,000 | ) |  |  | 914,000 |
Other property and equipment |  | 3 – 17 years |  |  | 3,840,000 |  |  |  | (3,457,000 | ) |  |  | 383,000 |
Total |  |  |  |  | $ | 226,368,000 |  |  |  | $ | (176,280,000 | ) |  |  | $ | 50,088,000 |
In October 2004, the Government of Alberta enacted amendments to the Natural Gas Royalty Regulation which provide a mechanism to reduce royalties for operators of natural gas wells which have been denied the right to produce by the Energy Resources Conservation Board as a result of government bitumen conservation policies. If production recommences from zones previously ordered to be shut-in, Barnwell may pay an incremental royalty to the Crown on production from the reinstated pools, along with Alberta Gas Crown Royalties otherwise payable. Barnwell received a total of $98,000 and $124,000 for wells shut-in in the Thornbury area in fiscal years 2011 and 2010, respectively. It is Barnwell’s estimation that the subject Thornbury wells will not recommence production and the receipts are payments for deemed production by the Government of Alberta to Barnwell for condemnation of the wells and accordingly, were credited to oil and natural gas properties for book purposes. Barnwell recognizes the fair value of a liability for an asset retirement obligation in the period in which it is incurred if a reasonable estimate of fair value can be made. The following is a reconciliation of the asset retirement obligation for the years ended September 30, 2011 and 2010:
|  | Year ended September 30, |
|  | 2011 |  |  |  | 2010 |
Asset retirement obligation as of beginning of year |  | $ | 4,869,000 |  |  |  | $ | 4,508,000 |
Obligations incurred on new wells drilled |  | 123,000 |  |  |  | 93,000 |
Revision of estimated obligation |  | (330,000 | ) |  |  | (48,000 | )
Accretion expense |  | 341,000 |  |  |  | 312,000 |
Payments |  | (36,000 | ) |  |  | (182,000 | )
Foreign currency translation adjustment |  | (46,000 | ) |  |  | 186,000 |
Asset retirement obligation as of end of year |  | $ | 4,921,000 |  |  |  | $ | 4,869,000 |

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- Definition Represents the entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale and includes the disclosure for an asset retirement obligation. + References No definition available. + Details
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