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7. Asset Retirement Obligation
 9 Months Ended
Sep. 30, 2015
Asset Retirement Obligation Disclosure [Abstract]  
Asset Retirement Obligation

The Company has asset retirement obligations (ARO) associated with the future plugging and abandonment of proved properties and related facilities. Under the provisions of FASB ASC 410-20-25, the fair value of a liability for an asset retirement obligation is recorded in the period in which it is incurred and a corresponding increase in the carrying amount of the related long lived asset. The liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. If the liability is settled for an amount other than the recorded amount, a gain or loss is recognized. The Company has no assets that are legally restricted for purposes of settling ARO.

 

The following table summarizes the Company’s asset retirement obligation transactions recorded in accordance with the provisions of FASB ASC 410-20-25 during the nine months ended September 30, 2015 and 2014:

 

   Nine Months Ended 
   September 30, 
   2015   2014 
Beginning ARO  $286,804   $160,665 
Liabilities incurred for new wells placed in production   42,391    61,815 
Accretion of discount on ARO   23,900    15,486 
Ending ARO  $353,095   $237,966