EARTHSTONE ENERGY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) The Company capitalized $1.6 million and $0.5 million, respectively, of costs associated with the credit agreements for the years ended December 31, 2019 and 2018. These capitalized costs are included in Other noncurrent assets in the Consolidated Balance Sheets. The Company’s policy is to capitalize the financing costs associated with its debt and amortize those costs on a straight-line basis over the term of the associated debt, which approximates the effective interest method over the term of the related debt. Note 14. Asset Retirement Obligations The Company has asset retirement obligations associated with the future plugging and abandonment of oil and natural gas properties and related facilities. Revisions to the liability typically occur due to changes in the estimated abandonment costs, well economic lives, and the discount rate. The following table summarizes the Company’s asset retirement obligation transactions recorded during the years ended December 31, 2019 and 2018  (in thousands) : 2019 2018 Beginning asset retirement obligations $ 2,229 $ 2,354 Liabilities acquired  (1) — 298 Liabilities incurred 105 102 Property dispositions  (1) (10) (766) Liabilities settled (374 ) (79 ) Accretion expense 214 169 Revision of estimates — 151 Ending asset retirement obligations $ 2,164 $ 2,229 (1) See  Note 3. Acquisitions and Divestitures  for additional information on the Company’s acquisition and property disposition activities. Note 15. Related Party Transactions FASB ASC Topic 850 , Related Party Disclosures , requires that information about transactions with related parties that would make a difference in decision making shall be disclosed so that users of the financial statements can evaluate their significance. Flatonia Energy, LLC (“Flatonia”), which owns approximately 7% of the outstanding Class A Common Stock and approximately 3.2% of the combined voting power of the Company’s outstanding Class A and Class B Common Stock as of December 31, 2019, is a party to a joint operating agreement (the “Operating Agreement”) with the Company. The Operating Agreement covers certain jointly owned oil and natural gas properties located in the Eagle Ford Trend of south Texas. In connection with the Operating Agreement, the Company made payments to Flatonia of $15.3 million and $12.4 million, and received payments from Flatonia of $6.4 million and $6.1 million, respectively, for the years ended December 31, 2019 and 2018. At December 31, 2019 and 2018, amounts receivable due from Flatonia in connection with the Operating Agreement were $0.6 million and $0.8 million, respectively. Payables related to revenues outstanding and due to Flatonia as of December 31, 2019 and 2018 were $1.1 million and $1.6 million, respectively. Earthstone’s majority shareholder consists of various investment funds managed by a venture capital firm who may manage other investments in entities with which the Company interacts in the normal course of business. On October 31, 2019, the Company sold certain of its interests in oil and natural gas leases and wells located in Martin County, Texas in an arm’s length transaction to a portfolio company of Earthstone’s majority shareholder (not under common control) for cash consideration of approximately $3.6 million. In connection with Olenik v. Lodzinski et al. (described below), Earthstone’s majority shareholder was also named in the lawsuit. The Company is currently in negotiations with its insurance carrier around an allocation of litigation costs above its deductible for all the parties named in the lawsuit. Once the allocation is agreed upon, cost will be assigned to each party affected. As of December 31, 2019, the Company has not recorded a receivable for prospective insurance settlement proceeds. Charges associated with this legal action are included in Transaction costs in the Consolidated Statements of Operations. Any proceeds received from the Company’s insurance carrier will be recorded as a reduction of Transactions costs in the period received. Future minimum contractual commitments as of December 31, 2019 under non-cancelable agreements having initial or remaining terms in excess of one year are as follows:  Note 16. Commitments and Contingencies 22 Contractual Commitments