Commitments And Contingencies

9 Months Ended

Sep. 30, 2015

Loss Contingency [Abstract]

Commitments And Contingencies

COMMITMENTS AND CONTINGENCIES

QRCI did not pay an uneconomic Canadian gathering and processing commitment, which included significant unused firm capacity, due in late February 2015. In early March 2015, the third-party service provider issued a demand letter regarding the missed payment and suspended service resulting in our Horn River Asset production being shut-in. Further, a termination notice was issued by the third-party service provider effective March 19, 2015. We continue to explore alternatives to gather and process our Horn River Asset production; however, we may not be able to find economic alternatives in the near-term, or at all, and production may remain shut-in.

In connection with this Canadian gathering and processing contract, we had previously issued a letter of credit in the amount of C$33 million. Upon termination, the third party drew down the full face amount of the letter of credit. We do not believe the third party was legally entitled to draw down the entire amount of the letter of credit and we have reserved all of our rights, entitlements and remedies in that regard. The $26.2 million (C$33 million) draw is shown as a reduction to amounts outstanding under the contract for services provided prior to the termination and the remaining $21.5 million is recognized as Other Expense. At the present time, we cannot predict the ultimate outcome of this matter, including whether some or all of the C$33 million drawn on the letter of credit will be payable to us or whether any additional amounts will have to be paid related to the termination of the contract.

We expect that we and the third party will disagree as to what are the remaining obligations under the relevant agreement and the length of the remaining term of the agreement and as to the remedies and defenses available to the parties. While we expect to vigorously dispute the amount, we expect that the third party will claim to be entitled to up to approximately C$126 million (including the proceeds of the letter of credit) as the aggregate of the monthly tolls for firm capacity for the alleged remainder of the term of the relevant agreement.

Note 1 to this Quarterly Report contains a description of our claims reconciliation process associated with the bankruptcy proceedings.

On April 15 and May 8, 2015, the Bankruptcy Court issued orders allowing us to reject certain executory contracts effective March 17 and April 1, 2015 and the total estimated allowable claim under these contracts has been included in Liabilities Subject to Compromise and Reorganization Items, net as appropriate. The reductions impacted our GPT contracts included in the contractual obligation table included in our 2014 Form 10-K and reduced our total payments due over the life of the contracts as of the date the contracts were rejected by approximately $39 million.

We renegotiated an NGL GPT contract in our Barnett Shale Asset effective April 2015, which reduced our GPT contracts included in the contractual obligation table included in our 2014 Form 10-K over the life of the contract by approximately $100 million.

Note 13 to the consolidated financial statements in our 2014 Annual Report on Form 10-K contains a more complete description of our contractual obligations, commitments and contingencies for which there are no other significant updates during the quarter ended September 30, 2015.