W&T Offshore, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

ASSET RETIREMENT OBLIGATIONS

ASSET RETIREMENT OBLIGATIONS

12 Months Ended

Dec. 31, 2022

NOTE 7 — ASSET RETIREMENT OBLIGATIONS

Asset retirement obligations associated with the retirement and decommissioning of tangible long-lived assets are required to be recognized as a liability in the period in which a legal obligation is incurred and becomes determinable, with an offsetting increase in the carrying amount of the associated asset. The cost of the tangible asset, including the initially recognized ARO, is depleted such that the cost of the ARO is recognized over the useful life of the asset. The fair value of the ARO is measured using expected cash outflows associated with the ARO, discounted at the Company’s credit-adjusted risk-free rate when the liability is initially recorded. Accretion expense is recognized over time as the discounted liability is accreted to its expected settlement value.

The following changes in liability are included in the Consolidated Balance Sheet in current and long-term liabilities, and the changes in that liability were as follows (in thousands):


	Year Ended December 31,
	2022		2021
Asset retirement obligations, beginning of period	$	424,495	$	392,704
Liabilities settled		(76,225)		(27,309)
Accretion expense		26,508		22,925
Liabilities acquired		33,202		454
Liabilities incurred		138		—
Revisions of estimated liabilities		58,312		35,721
Asset retirement obligations, end of period		466,430		424,495
Less: Current portion		(25,359)		(56,419)
Long-term	$	441,071	$	368,076