J. Asset Retirement Obligation |
9 Months Ended |
|---|---|
Mar. 31, 2017 | |
| Accounting Policies [Abstract] | |
| Asset Retirement Obligation |
The Company has recognized estimated asset retirement obligations (closure cost) of $434,000 at March 31, 2017 to remove leasehold improvements, remediate any pollution issues and return the Deer Creek water disposal property to itsnatural state at the conclusion of the Companys lease. The closure process is a requirement of both the Deer Creek lease and the State of Colorado, a permitting authority for such facilities. Theclosure cost estimate, in current dollars, was completed by an approved independent consultant experienced in estimating closure costs for water disposal operations and the estimated amount was approved by the State of Colorado. A present value discount has not been taken as the estimated closure costs, excluding regulatory changes and inflation adjustments, are anticipated to remain fairly consistent over the operational life of the facility.
The Company reviews the asset retirement obligation quarterly and performs a formal annual assessment of its estimates to determine if an adjustment to the value of the asset retirement obligation is required.
The laws of the State of Colorado require companies to meet environmental and asset retirement obligations by selecting an approved payment method. The Company has elected to meet its obligation by making quarterly payments of approximately $4,700 into a trust that, over the expected lease period, will build liquid assets to meet the asset retirement obligation. During the nine months ended March 31, 2017, the Company made $9,400 of the required $14,100 of quarterly payments and in addition paid $1,300 required for an inflation adjustment. The unpaid trust payment in the amount of $4,700 is included in accounts payable. The balances in the trust account for the asset retirement obligation as of March 31, 2017 and June 30, 2016 were $101,500 and $86,100, respectively. |