As part of our normal business activities, we may be named as defendants in litigation and legal proceedings, including those arising from regulatory and environmental matters.

Although the Company is insured against various risks to the extent the Company believes it is prudent, there is no assurance that the nature and amount of such insurance will be adequate, in every case, to indemnify it against liabilities arising from future legal proceedings.

Environmental costs for remediation are accrued based on estimates of known remediation requirements. Such accruals are based on management’s best estimate of the ultimate cost to remediate a site and are adjusted as further information and circumstances develop. Those estimates may change substantially depending on information about the nature and extent of contamination, appropriate remediation technologies and regulatory approvals. Expenditures to mitigate or prevent future environmental contamination are capitalized. Ongoing environmental compliance costs are charged to expense as incurred. In accruing for environmental remediation liabilities, costs of future expenditures for environmental remediation are not discounted to their present value, unless the amount and timing of the expenditures are fixed or reliably determinable. At December 31, 2021 and 2020, the Company had no environmental reserves recorded.

As of February 11, 2022, the Company and certain of its subsidiaries are named defendants in a putative class action pending in the United States District Court for the Central District of California. The plaintiffs seek unspecified monetary damages and certain forms of injunctive relief. We are also participating in a related claims process organized under the Oil Pollution Act of 1990, 33 U.S.C. S 2701 et seq. (“OPA 90”). Under OPA 90, a party alleged to be responsible for a discharge of oil is required to establish a claims process to pay for interim costs and damages as a result of the discharge. The OPA 90 claims process remains at a preliminary stage.

Future litigation may be necessary, among other things, to defend ourselves by determining the scope, enforceability, and validity of claims. The results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.

On April 30, 2018, the Legacy Amplify debtors filed with the Bankruptcy Court a motion for a final decree and entry of an order closing the Chapter 11 cases with respect to each of the Legacy Amplify debtors other than (i) San Pedro Bay Pipeline Company, Ch. 11 Case No. 17-30249, (ii) Rise Energy Beta, LLC, Ch. 11 Case No. 17-30250, and (iii) Beta Operating Company, LLC, Ch. 11 Case No. 17-30253, (collectively, the “Closing Debtors”). On May 30, 2018, the Bankruptcy Court entered the final decree closing the Chapter 11 cases of the Closing Debtors.

On August 24, 2020, the Legacy Amplify debtors filed with the Bankruptcy Court a motion for a final decree closing the remaining Chapter 11 cases with respect to (i) San Pedro Bay Pipeline Company, Ch. 11 Case No. 17-30249, (ii) Rise Energy Beta, LLC, Ch. 11 Case No. 17-30250, and (iii) Beta Operating Company, LLC, Ch. 11 Case No. 17-30253. On September 15, 2020, the Bankruptcy Court entered the final decree closing the remaining Chapter 11 cases. Accordingly, certain expenses, gains and losses that were realized or incurred in the bankruptcy proceedings are recorded in “reorganization items, net” on the Company’s Consolidated Statement of Operations.

Beta Operating Company, LLC, a wholly owned subsidiary, assumed an obligation with a third party to make payments into a sinking fund in connection with its 2009 acquisition of the Company properties in federal waters offshore Southern California, the purpose of which is to provide funds adequate to decommission the portion of the San Pedro Bay Pipeline that lies within state waters and the surface facilities. Under the terms of the agreement, the operator of the properties is obligated to make monthly deposits into the sinking fund account in an amount equal to $0.25 per barrel of oil and other liquid hydrocarbon produced from the acquired working interest. Interest earned in the account stays in the account. The obligation to fund ceases when the aggregate value of the account reaches $4.3 million. As of December 31, 2021, the account balance included in restricted investments was approximately $4.3 million.

Beta has an obligation with the BOEM in connection with the 2009 acquisition of the Beta Properties. The Company supports this obligation with $161.3 million in A-rated surety bonds and $0.3 million in cash at December 31, 2021. The Company’s existing bonding arrangements issued in connection with the decommissioning obligations related to our Beta Properties contain additional collateral requirements pursuant to which we may be required to post collateral at any time, on demand, at the sureties’ sole discretion, which may negatively impact our liquidity position.

Pursuant to these additional collateral requirements, on December 15, 2021, the Company entered into two escrow funding agreements with its surety providers to fund interest-bearing escrow accounts on a quarterly basis to reimburse and indemnify the surety providers for any claims arising under the surety bonds related to the decommissioning of our Beta properties. As long as we continue to comply with our obligations under such escrow agreements, the surety providers party thereto have agreed to stay requests of additional collateral in the form of cash or letters of credit, certificates of deposit or other similar forms of liquid collateral. If any such additional collateral were requested, such additional collateral may negatively impact the Company’s liquidity position. The obligation ceases when the aggregate value of the account reaches $172.6 million. The table below outlines our funding commitment under these agreements at December 31, 2021 (in thousands):

(1)	The remaining payments will be made during the years of 2027 through 2033.

The expense related to the surety bonds is recorded in interest expense in the Company Statement of Consolidated Operations.

Operating Leases

We have leases for offshore Southern California pipeline right-of-way use as well as office space in our operating regions. We also lease equipment, compressors and incur surface rentals related to its business operations.

For the years ended December 31, 2021 and 2020, the Company recognized $7.6 million and $8.3 million of rent expense, respectively.

See Note 12 for the minimum lease payment obligations under non-cancelable operating leases with a remaining term in excess of one year.

Purchase Commitments

At December 31, 2021, the Company had a CO₂ purchase commitment with a third party associated with its Wyoming Bairoil properties. The price we will pay for CO₂ generally varies depending on the amount of CO₂ delivered and the price of oil. The table below outlines its purchase commitments under these contracts based on pricing at December 31, 2021 (in thousands):


	Payment or Settlement Due by Period
Purchase commitment	Total		2022		2023		2024		2025		2026		Thereafter
CO₂ minimum purchase commitment	$	3,975	$	3,975	$	—	$	—	$	—	$	—	$	—

Minimum Volume Commitment

At December 31, 2021, the Company had long-term minimum volume commitments with third parties associated with a certain portion of its properties located in Oklahoma and East Texas. The table below outlines the future payment commitments associated with the minimum volume commitment plus any applicable fee for not meeting the minimum volume commitment (in thousands):


	Payment or Settlement Due by Period (1)
	Total		2022		2023		2024		2025		2026		Thereafter
Minimum volume commitment	$	15,196	$	12,283	$	2,913	$	—	$	—	$	—	$	—

(2)	The amounts in the table do not reflect costs adjusted for inflation.

The Company is party to a gas purchase, gathering and processing contract in Oklahoma, which includes certain minimum NGL commitments. To the extent the Company does not deliver natural gas volumes in sufficient quantities to generate, when processed, the minimum levels of recovered NGLS, it would be required to reimburse the counterparty an amount equal to the sum of the monthly shortfall, if any, multiplied by a fee. The Company is not meeting the minimum volume required under these contractual provisions. The commitment fee expense for the year ended December 31, 2021 and 2020, was approximately $1.6 million and $2.1 million. The minimum volume commitment for Oklahoma ends on June 30, 2023.

The Company is party to a gas purchase, gathering and processing contract in East Texas, which includes certain minimum gas commitments. The Company is not meeting the minimum volume required under this contractual provision. The commitment fee expense for the year ended December 31, 2021 and 2020, was approximately $2.0 million and $1.8 million, respectively. The minimum volume commitment for East Texas ends on November 30, 2022.