Note 9 - Asset Retirement Obligations

3 Months Ended

Mar. 31, 2014

Note 9 – Asset Retirement Obligations

The total future asset retirement obligation is estimated by management based on the Company’s net working interests in all wells and facilities, estimated costs to reclaim and abandon wells and facilities and the estimated timing of the costs to be incurred in future periods. At March 31, 2014 and December 31, 2013, the Company estimated the undiscounted cash flows related to asset retirement obligation to total approximately $185,695. The fair value of the liability at March 31, 2014 and December 31, 2013 is estimated to be $61,679 and $60,061, respectively, using risk free rates between 2.48 and 4.24 percent and inflation rates between 2.75 and 4.20 percent. The actual costs to settle the obligation are expected to occur in approximately 25 years.

Changes to the asset retirement obligation were as follows:

	March 31, 2014		December 31, 2013
Balance, beginning of year	$	60,061	$	56,040
Liabilities incurred		380		--
Disposal		-		(929	)
Accretion expense		1,238		4,950
Balance, end of year	$	61,679	$	60,061

Note 10 - Subsequent Events

On May 12, 2014 the Company issued 250,000 shares of common stock to an unrelated third party as payment for services rendered. The shares were valued at $0.04 per share, being the market price of the stock on the date of issuance, resulting in a total value of $10,000.

In accordance with ASC 855-10, the Company’s management has reviewed all material events and there are no additional material subsequent events to report.

- Definition

Disclosure of accounting policy for determining amounts to accrue and charge against earnings so as to satisfy legal obligations associated with the retirement (through sale, abandonment, recycling, or disposal in some other manner) of a tangible long-lived asset that result from the acquisition, construction, or development and (or) the normal operation of a long-lived asset. This accounting policy disclosure excludes obligations arising 1) in connection with leased property, whether imposed by a lease agreement or by a party other than the lessor, that meet the definition of either minimum lease payments or contingent rentals; 2) solely from a plan to sell or otherwise dispose of a long-lived asset and 3) from certain environmental remediation liabilities.

+ References+ Details

Capital City Energy Group, Inc. 10-Q