Quarterly report pursuant to Section 13 or 15(d)

Property and Equipment

v3.8.0.1
Property and Equipment
 9 Months Ended
Sep. 30, 2017
Property, Plant and Equipment [Abstract]  
Property and Equipment
PROPERTY AND EQUIPMENT
The major categories of property and equipment and related accumulated depletion, depreciation, amortization and impairment as of September 30, 2017 and December 31, 2016 are as follows:
 
September 30, 2017
 
December 31, 2016
 
(In thousands)
Oil and natural gas properties
$
8,867,239

 
$
6,071,920

Office furniture and fixtures
34,875

 
21,204

Building
44,530

 
42,530

Land
4,820

 
5,252

Total property and equipment
8,951,464

 
6,140,906

Accumulated depletion, depreciation, amortization and impairment
(4,043,879
)
 
(3,789,780
)
Property and equipment, net
$
4,907,585

 
$
2,351,126



Under the full cost method of accounting, the Company is required to perform a ceiling test each quarter. The test determines a limit, or ceiling, on the book value of the oil and natural gas properties. At September 30, 2017, the calculated ceiling was greater than the net book value of the Company’s oil and natural gas properties, thus no ceiling test impairment was required for the nine months ended September 30, 2017. An impairment of $212.2 million and $601.8 million was required for oil and natural gas properties for the three and nine months ended September 30, 2016, respectively.
Included in oil and natural gas properties at September 30, 2017 is the cumulative capitalization of $155.5 million in general and administrative costs incurred and capitalized to the full cost pool. General and administrative costs capitalized to the full cost pool represent management’s estimate of costs incurred directly related to exploration and development activities such as geological and other administrative costs associated with overseeing the exploration and development activities. All general and administrative costs not directly associated with exploration and development activities were charged to expense as they were incurred. Capitalized general and administrative costs were approximately $8.9 million and $25.6 million for the three and nine months ended September 30, 2017, respectively, and $7.2 million and $22.2 million for the three and nine months ended September 30, 2016, respectively.
The following table summarizes the Company’s non-producing properties excluded from amortization by area at September 30, 2017:
 
September 30, 2017
 
(In thousands)
Utica
$
1,517,555

MidContinent
1,435,992

Niobrara
2,182

Southern Louisiana
536

Bakken
99

Other
368

 
$
2,956,732


At December 31, 2016, approximately $1.6 billion of non-producing leasehold costs was not subject to amortization.
The Company evaluates the costs excluded from its amortization calculation at least annually. Subject to industry conditions and the level of the Company’s activities, the inclusion of most of the above referenced costs into the Company’s amortization calculation typically occurs within three to five years. However, the majority of the Company’s non-producing leases have five-year extension terms which could extend this time frame beyond five years.
A reconciliation of the Company’s asset retirement obligation for the nine months ended September 30, 2017 and 2016 is as follows:
 
September 30, 2017
 
September 30, 2016
 
(In thousands)
Asset retirement obligation, beginning of period
$
34,276

 
$
26,437

Liabilities incurred
11,557

 
6,726

Liabilities settled
(2,520
)
 
(955
)
Accretion expense
1,148

 
777

Asset retirement obligation as of end of period
44,461

 
32,985

Less current portion
195

 
75

Asset retirement obligation, long-term
$
44,266

 
$
32,910