Commitments and Contingencies

9 Months Ended

Sep. 30, 2011

Commitments and Contingencies [Abstract]

Commitments and Contingencies

Note 9 — Commitments and Contingencies

Commitments

For the three months ended September 30, 2011 and 2010, rental expense for leased office space, vehicles, compressors and related field equipment used in our operations totaled $1,122,000 and $773,000, respectively. For the nine months ended September 30, 2011 and 2010, rental expense for leased office space, vehicles, compressors and related field equipment used in our operations totaled $3,179,000 and $2,506,000, respectively.

We are party to firm transportation or fractionation and product sales agreements with Wyoming Interstate Gas Company (“WIC”), Fort Union and Formosa Hydrocarbons Company, Inc. (“Formosa”) under which we are obligated to pay for natural gas or NGL services whether or not we use such services. The agreements with WIC, Fort Union and Formosa expire December 31, 2019, November 30, 2017 and March 31, 2023, respectively. Under these agreements, we are obligated to pay in aggregate approximately $4,079,000 for the remainder of 2011, $17,021,000 in 2012, $24,728,000 in 2013, $23,905,000 in 2014, $22,489,000 in 2015 and $107,633,000 over the remainder of the contract terms.

We have fixed-quantity contractual commitments to Targa North Texas LP (“Targa”) in settlement of a dispute regarding what portion, if any, of natural gas we were purchasing from producers had been contractually dedicated by us for resale to Targa. As of September 30, 2011, we had fixed contractual commitments to provide Targa a total of 2.373 billion cubic feet of natural gas for each of 2011, 2012 and 2013. Under the terms of the agreement, we are obligated to pay annual fees ($1.10 per thousand cubic feet (“Mcf”), $1.15 per Mcf and $1.25 per Mcf for 2011, 2012 and 2013, respectively) to the extent our natural gas deliveries to Targa fall below the committed quantity. In February 2011, we paid $2,134,000 to Targa in settlement of our 2010 obligation. As of September 30, 2011, we have accrued $1,324,000 of our 2011 obligation.

Regulatory Compliance

In the ordinary course of business, we are subject to various laws and regulations. In the opinion of our management, compliance with existing laws and regulations will not materially affect our financial position, results of operations or cash flows.

Litigation

Our acquisition of our Rocky Mountains segment from Cantera Resources, Inc. (“CRI”) in October 2007 included Cantera Gas Company LLC (“Cantera Gas Company,” formerly CMS Field Services, Inc. (“CMSFS”)). Cantera Gas Company is a party to a number of legal proceedings alleging (i) false reporting of natural gas prices by CMSFS and numerous other parties and (ii) other related claims. The claims made in these proceedings are based on events that occurred before CRI acquired CMSFS in June 2003 (the “CMS Acquisition”). The amount of liability, if any, against Cantera Gas Company is not reasonably estimable. Pursuant to the CMS Acquisition purchase agreement, CMS Gas Transmission has assumed responsibility for the defense of these claims, and Cantera Gas Company is fully indemnified by CMS Gas Transmission and its parent, CMS Enterprises Company, against any losses that Cantera Gas Company may suffer as a result of these claims.

We may, from time to time, be involved in other litigation and claims arising out of our operations in the normal course of business.