Quarterly report pursuant to Section 13 or 15(d)

PROPERTY AND EQUIPMENT

v3.10.0.1
PROPERTY AND EQUIPMENT
9 Months Ended
Sep. 30, 2018
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, 2018 and December 31, 2017 are as follows:
 
September 30, 2018
 
December 31, 2017
 
(In thousands)
Oil and natural gas properties
$
9,936,714

 
$
9,169,156

Office furniture and fixtures
42,302

 
37,369

Building
44,565

 
44,565

Land
5,521

 
4,820

Total property and equipment
10,029,102

 
9,255,910

Accumulated depletion, depreciation, amortization and impairment
(4,506,306
)
 
(4,153,733
)
Property and equipment, net
$
5,522,796

 
$
5,102,177



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, 2018, 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, 2018. No impairment was required for oil and natural gas properties for the nine months ended September 30, 2017.
Included in oil and natural gas properties at September 30, 2018 is the cumulative capitalization of $194.4 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 $10.6 million and $28.8 million for the three and nine months ended September 30, 2018, respectively, and $8.9 million and $25.6 million for the three and nine months ended September 30, 2017, respectively.
The average depletion rate per Mcfe, which is a function of capitalized costs, future development costs and the related underlying reserves in the periods presented, was $0.94 and $0.89 per Mcfe for the nine months ended September 30, 2018 and 2017, respectively.
The following table summarizes the Company’s non-producing properties excluded from amortization by area at September 30, 2018:
 
September 30, 2018
 
(In thousands)
Utica
$
1,522,633

MidContinent
1,401,392

Niobrara
449

Southern Louisiana
571

Bakken
100

 
$
2,925,145


At December 31, 2017, approximately $2.9 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 in the Utica Shale 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, 2018 and 2017 is as follows:
 
September 30, 2018
 
September 30, 2017
 
(In thousands)
Asset retirement obligation, beginning of period
$
75,100

 
$
34,276

Liabilities incurred
1,468

 
11,557

Liabilities settled
(719
)
 
(2,520
)
Accretion expense
3,056

 
1,148

Revisions in estimated cash flows
(374
)
 

Asset retirement obligation as of end of period
78,531

 
44,461

Less current portion
120

 
195

Asset retirement obligation, long-term
$
78,411

 
$
44,266