A key aspect of our process is the management of Abandonment and Reclamation Obligations (ARO). Bow River matches the retirement of its assets with the reserve life. Our average time to abandonment is 22 years. Based on our analysis of 53 publicly-traded companies, the industry average time to abandonment is 43 years.
Every year, we budget to abandon and reclaim more wells than that required by regulation. In periods of low commodity prices, we moderate that activity, but increase again as commodity prices strengthen.
To maximize the value (minimize the liability), Bow River employs an internally-built algorithm that optimizes our activity in ARO management. This model assesses each well, analyses the appropriate work to be done, and the timing of such work in the context of our other activity in the area.