This excerpt taken from the DPM 8-K filed Oct 23, 2008.
NOTE 6 - ASSET RETIREMENT OBLIGATIONS
The Company has legal obligations associated with its natural gas processing plants. The legal obligations include removing the plant, equipment, and any other products on the property and returning the property to its natural state. The Company accrues a liability for legal obligations based on an estimate of the timing and amount of their settlement.
The Company recorded an asset retirement obligation as of January 1, 2007, the business acquisition date, totaling $631,346. Accretion expense totaled $49,421 for the year ending December 31, 2007, and $26,645 and $24,711 for the six months ending June 30, 2008 and 2007.
This excerpt taken from the DPM 8-K filed Oct 3, 2007.
7. Asset Retirement Obligations
Our asset retirement obligations relate primarily to the retirement of various gathering pipelines and processing facilities, obligations related to right-of-way easement agreements, and contractual leases for land use. We recognize the fair value of a liability for an asset retirement obligation in the period in which it is incurred, if a reasonable estimate of fair value can be made. The fair value of the liability is added to the carrying amount of the associated asset. This additional carrying amount is then depreciated over the life of the asset. The liability increases due to the passage of time based on the time value of money until the obligation is settled. Accretion expense for the six months ended June 30, 2007 and 2006 (unaudited), and the years ended December 31, 2006, 2005 and 2004 was not significant.
The asset retirement obligation is adjusted each quarter for any liabilities incurred or settled during the period, accretion expense and any revisions made to the estimated cash flows. The asset retirement obligation as of June 30, 2007, and December 31, 2006 and 2005, included in the combined balance sheets as other long-term liabilities, was $0.5 million (unaudited), $0.4 million and $0.4 million, respectively.