Quarterly report pursuant to Section 13 or 15(d)

Property and Equipment

v3.7.0.1
Property and Equipment
 6 Months Ended
Jun. 30, 2017
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 June 30, 2017 and December 31, 2016 are as follows:
 
June 30, 2017
 
December 31, 2016
 
(In thousands)
Oil and natural gas properties
$
8,500,790

 
$
6,071,920

Office furniture and fixtures
30,227

 
21,204

Building
44,474

 
42,530

Land
4,820

 
5,252

Total property and equipment
8,580,311

 
6,140,906

Accumulated depletion, depreciation, amortization and impairment
(3,937,656
)
 
(3,789,780
)
Property and equipment, net
$
4,642,655

 
$
2,351,126



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 June 30, 2017, 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 six months ended June 30, 2017. An impairment of $170.6 million and $389.6 million was required for oil and natural gas properties for the three and six months ended June 30, 2016, respectively.
Included in oil and natural gas properties at June 30, 2017 is the cumulative capitalization of $146.6 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 $8.3 million and $16.7 million for the three and six months ended June 30, 2017, respectively, and $7.9 million and $15.0 million for the three and six months ended June 30, 2016, respectively.
The following table summarizes the Company’s non-producing properties excluded from amortization by area at June 30, 2017:
 
June 30, 2017
 
(In thousands)
Utica
$
1,614,824

MidCon
1,491,144

Niobrara
2,173

Southern Louisiana
536

Bakken
98

Other
368

 
$
3,109,143


At December 31, 2016, approximately $1.6 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 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 six months ended June 30, 2017 and 2016 is as follows:
 
June 30, 2017
 
June 30, 2016
 
(In thousands)
Asset retirement obligation, beginning of period
$
34,276

 
$
26,437

Liabilities incurred
9,505

 
3,195

Liabilities settled
(344
)
 
(72
)
Accretion expense
692

 
508

Asset retirement obligation as of end of period
44,129

 
30,068

Less current portion
195

 
75

Asset retirement obligation, long-term
$
43,934

 
$
29,993