CONCHO RESOURCES INC | 2013 | FY | 3


Note E. Asset retirement obligations

 

The Company's asset retirement obligations represent the estimated present value of the estimated cash flows the Company will incur to plug, abandon and remediate its producing properties at the end of their productive lives, in accordance with applicable state laws. Market risk premiums associated with asset retirement obligations are estimated to represent a component of the Company's credit-adjusted risk-free rate that is utilized in the calculations of asset retirement obligations.

 

The Company's asset retirement obligation transactions during the years ended December 31, 2013, 2012 and 2011 are summarized in the table below:

 

           
   Years Ended December 31,
(in thousands)  2013  2012  2011
           
Asset retirement obligations, beginning of period  $ 86,261 $ 59,685 $ 43,326
 Liabilities incurred from new wells    6,338   7,729   7,178
 Liabilities assumed in acquisitions    593   29,113   527
 Accretion expense for continuing operations    6,047   4,187   2,444
 Accretion expense for discontinued operations    -    1,004   529
 Disposition of wells    -    (24,614)   (463)
 Liabilities settled upon plugging and abandoning wells    (3,447)   (1,261)   (686)
 Revision of estimates    5,801   10,418   6,830
Asset retirement obligations, end of period  $ 101,593 $ 86,261 $ 59,685
           
           

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