Part IV
Item 15.
Exhibits and Financial Statement Schedules
XTO ENERGY INC. Notes to Consolidated Financial Statements
5. Asset Retirement Obligation
Our asset retirement obligation primarily represents the estimated present value of the amount we will incur to plug, abandon and remediate our proved producing properties at the end of their productive lives, in accordance with applicable state laws. We determine our asset retirement obligation by calculating the present value of estimated cash flows related to the liability. The following is a summary of asset retirement obligation activity for the years ended December 31, 2007 and 2006:
(in millions) |
2007 |
2006 |
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| Asset retirement obligation, January 1 | $ | 307 | $ | 223 |
| Revisions in the estimated cash flows | 39 | 36 | ||
| Liability incurred upon acquiring and drilling wells | 87 | 35 | ||
| Liability settled upon plugging and abandoning wells | (2) | (3) | ||
| Accretion of discount expense | 22 | 16 | ||
| Asset retirement obligation, December 31 | 453 | 307 | ||
| Less current portion | (3) | (4) | ||
| Asset retirement obligation, long term | $ | 450 | $ | 303 |
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