Asset Retirement Obligations

9 Months Ended

Sep. 30, 2020

Asset Retirement Obligation Disclosure [Abstract]

3.	Asset Retirement Obligations

The Partnership has recognized an estimated asset retirement obligation liability (“ARO”) for future plugging and abandonment costs. A liability for the estimated fair value of the future plugging and abandonment costs is recorded with a corresponding increase in the full cost pool at the time a new well is drilled. Depletion expense associated with estimated plugging and abandonment costs is recognized in accordance with the full cost methodology.

The Partnership estimates a liability for plugging and abandonment costs based on historical experience and estimated well life. The liability is discounted using the credit-adjusted risk-free rate. Revisions to the liability could occur due to changes in well plugging and abandonment costs or well useful lives, or if federal or state regulators enact new well restoration requirements. The Partnership recognizes accretion expense in connection with the discounted liability over the remaining life of the well.

A reconciliation of the Partnership’s liability for well plugging and abandonment costs for the nine months ended September 30, 2020 and the year ended December 31, 2019 is as follows:

	2020			2019
Balance, beginning of period	$	1,528,952		$	1,608,866
Liabilities incurred		—			1,122
Liabilities reduced due to settlements and sales of property		(992	)		(148,724	)
Accretion expense		53,418			67,688
Balance, end of period	$	1,581,378		$	1,528,952

MEWBOURNE ENERGY PARTNERS 08-A LP 10-Q