The fair value of a liability for an asset retirement obligation is recognized in the period in which it is incurred by capitalizing it as part of the carrying amount of the long-lived assets. The Company records asset retirement obligations for the future abandonment costs of tangible assets such as platforms, wells, pipelines and other facilities. The liability is accreted to its then present value each period, and the capitalized cost is depreciated over the useful life of the related asset. If the liability is settled for an amount other than the recorded amount, a gain or loss is recognized.

A summary of the recording of the estimated fair value of the Company’s asset retirement obligations is presented as follows:

During the year ended December 31, 2012, the Company increased the asset retirement obligations to recognize the abandonment liability for the exploratory well onshore Gabon, the second development well in the Granite Wash formation in North Texas, and 2 new exploratory wells in Montana. The $5.7 million asset retirement cost revision for 2012 was primarily due to changes in asset retirement cost estimates on the Etame block offshore Gabon. The increase in the asset retirement obligation in 2011 was due to the first development well in the Granite Wash formation in North Texas. During the year ended December 31, 2010, the Company increased the asset retirement obligations to recognize the abandonment liability for three new development wells (Ebouri 4-H, Etame 7-H, and S. Tchibala 2-H).

As of December 31, 2012, the Company had $44,000 legally restricted for settling asset retirement obligations in the United States.

The Company does not plan to abandon any material assets over the next five years.