NOTE 14. COMMITMENTS AND CONTINGENCIES

On the Effective Date, Harvest entered into a Services Agreement (the “Services Agreement”) with EnerVest, Ltd. and EnerVest Operating, L.L.C. (together, the “EnerVest Group”). Pursuant to the Services Agreement, the EnerVest Group will provide certain administrative, management, operating and other services and support to Harvest (the “Services”) following the Effective Date. In addition, the EnerVest Group will also provide Harvest with sufficient office space, equipment and office supplies pursuant to the Services Agreement. The Services Agreement covers the people EnerVest employs who provide direct support to the Company’s operations; however, the Services Agreement does not cover the five full-time employees of Harvest which include the Chief Executive Officer and the Chief Financial Officer. The management fee is subject to an annual redetermination by agreement of the parties and may also be adjusted for acquisitions or divestitures over $5 million. The initial term of the Services Agreement is through December 31, 2020, and it may be renewed annually upon the mutual agreement of the parties 90 days prior to expiration. In the event that EnerVest determines not to renew the Services Agreement, Harvest may cause the Services Agreement to extend for an additional year to provide Harvest with an opportunity to seek a replacement services provider.

During October 2019, the EnerVest Group informed Harvest that there are approximately $4.1 million of uncollectible accounts receivable from third party working interest owners in oil and natural gas properties where Harvest owns a significant working interest for which the EnerVest Group believes Harvest may be responsible since the EnerVest Group was not able to collect the accounts receivable. The costs related to these receivables were primarily incurred over the last eight years and were paid by the EnerVest Group as the contract operator for such properties. Harvest has performed a preliminary assessment of its obligations with respect to these amounts and has communicated to the EnerVest Group that it believes that the amounts are not currently owed by Harvest to the EnerVest Group. Accordingly, Harvest has determined that the amount of its obligations with respect to these uncollectible accounts receivable is not estimable at this time and has not accrued any losses with respect to the EnerVest Group’s uncollectible accounts receivable as of December 31, 2019.

In August 2018, the Company was notified by the Office of Natural Resources Revenue (“ONRR”) of potential underpayments of royalties related to certain leases for the period of 2009 through 2018. The Company has submitted amended royalty filings for the period of 2009 to 2018, pursuant to which Harvest has an additional liability of approximately $5.0 million. This amount will be paid upon ONRR review and concurrence with the accuracy of royalties per the amended filings. The Company recognized an accrual for the estimated liability for the period of 2009 to 2018 as of December 31, 2019 and 2018.

The Company is involved in other disputes or legal actions arising in the ordinary course of business. In August 2019, the Company agreed to a litigation settlement of $0.6 million related to such matters in the ordinary course of business, the expense for which is included in “General and administrative expenses” in the consolidated statements of operations for the year ended December 31, 2019. The Company does not believe the outcome of other such disputes or legal actions will have a material effect on its consolidated financial statements. No amounts, other than as described above, were accrued as of December 31, 2019.

The Company is subject to firm agreements for the future transportation and processing of natural gas. The Company is obligated to transport minimum daily natural gas volumes. As of December 31, 2019, the Company’s future minimum transportation fees under these agreements are as follows for the years ended December 31 (in thousands):


2020	$	747
2021		618
2022		412
	$	1,777