14. Commitments and Contingencies

From time to time, we are involved in litigation, regulatory examinations and administrative proceedings primarily arising in the ordinary course of our business in jurisdictions in which we do business. Although the outcome of these matters cannot be predicted with certainty, management believes none of these matters, either individually or in the aggregate, would have a material effect upon the Company’s financial position; however, an unfavorable outcome could have a material adverse effect on our results from operations for a specific interim period or year.

As of March 31, 2016, we had a commitment to drill one exploration well in Morocco and Senegal. In Morocco, our partner is obligated to fund our share of the cost of the exploration well, subject to a maximum spend of $120.0 million. The Senegal commitment was met with the Teranga-1 exploration well which was completed in May 2016. Additionally, we have 2D and 3D seismic requirements in Sao Tome and Principe of 1,200 square kilometers and 4,000 square kilometers, respectively. In Mauritania, we have applied to enter into the second phase of the exploration period which requires drilling two exploration wells and acquiring 1,000 square kilometers of 3D seismic. We are currently awaiting government approval.

In June 2013, Kosmos Energy Ventures (“KEV”), a subsidiary of Kosmos Energy Ltd., signed a long-term rig agreement with a subsidiary of Atwood Oceanics, Inc. for the new build 6th generation drillship “Atwood Achiever.” KEV took delivery of the Atwood Achiever in September 2014. The rig agreement originally covered an initial period of three years at a day rate of approximately $0.6 million, with an option to extend the agreement for an additional three year term. In September 2015, KEV amended the rig agreement effective October 1, 2015 to extend the contract end date by one year and reduce the rate to approximately $0.5 million per day. KEV has the option to revert to the original day rate of approximately $0.6 million per day and original agreement end date of November 2017. If KEV exercises the option, KEV would be required to make a rate recovery payment equal to the difference between the original day rate and the amended day rate multiplied by the number of days from the amendment effective date to the date the option is exercised plus certain administrative costs.

In November 2015, we entered into a line of credit agreement with one of our block partners, whereby our partner may draw up to $30 million on the line of credit to pay their portion of costs under the petroleum agreement. Interest accrues on drawn balances at 7.875%. The agreement matures on December 31, 2017, or earlier if certain conditions are met. As of March 31, 2016, there was $3.4 million outstanding under the agreement, which is included in other long-term assets.

Future minimum rental commitments under these leases at March 31, 2016, are as follows:


	Payments Due By Year(1)
	Total		2016(2)		2017		2018		2019		2020		Thereafter
	(In thousands)
Operating leases(3)	$	12,141	$	2,401	$	3,286	$	3,323	$	3,131	$	—	$	—
Atwood Achiever drilling rig contract(4)		473,765		136,282		180,883		156,600		—		—		—

(1)

Does not include purchase commitments for jointly owned fields and facilities where we are not the operator and excludes commitments for exploration activities, including well commitments, in our petroleum contracts.

(2)

Represents payments for the period from April 1, 2016 through December 31, 2016.

(3)

Primarily relates to corporate office and foreign office leases.

(4)

Commitments calculated using the amended day rate of $0.5 million effective October 1, 2015, excluding applicable taxes.