Energy Accounting

The initial steps needed to complete an ARO calculation are: 1) Determine the current costs to settle ARO (i.e. plug and abandon the well). To arrive at this estimate Companies can obtain a quote from an oilfield service provider, look at actual costs for a similar well that was recently plugged and abandoned, or have an estimate prepared internally with the assistance of operations personal. 2) Determine the estimated settlement date or date the well will be plugged and abandoned and calculate the future value of that liability based on inflation rate at inception of ARO. 3) Discount the future value of the ARO back to the date the liability was incurred using CARFR. True False