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Commitments and Contingencies

12 Months Ended

Dec. 31, 2018

Commitments And Contingencies Disclosure [Abstract]

Note 13—Commitments and Contingencies

(a) Legal Matters

From time to time, the Company may be a party to legal proceedings arising in the ordinary course of business. Management does not believe that a material loss is probable as a result of such proceedings.

(b) Environmental Matters

The Company is subject to numerous laws and regulations governing the discharge of materials into the environment or otherwise relating to environmental protection. To the extent laws are enacted or other governmental action is taken that restricts drilling or imposes environmental protection requirements that result in increased costs to the oil and natural gas industry in general, the business and prospects of the Company could be adversely affected.

The development of the Company’s oil and natural gas properties under their related leases will require a significant amount of capital. The timing of those expenditures will be determined by the lease provisions, the term of the lease and other factors associated with unproved leasehold acreage. To the extent that the Company is not the operator of oil and natural gas properties that it owns an interest in, the timing, and to some degree the amount, of capital expenditures will be controlled by the operator of such properties.

The Company leases office space under an operating lease that expires in 2024. Rent expense related to lease agreements for the years ended December 31, 2018, 2017, and 2016 was $0.6 million, $0.6 million and $0.9 million, respectively.

The following is a schedule by year, of the future minimum lease payments required under the lease agreements as of December 31, 2018 (in thousands).

2019		1,360
2020		1,060
2021		929
2022		755
2023		755
Thereafter		1,619
Total minimum lease payments	$	6,478

(d) Other Commitments (in thousands)

	Drilling rig commitments⁽ⁱ⁾		Firm transportation⁽ⁱⁱ⁾		Gas processing, gathering, and compression services⁽ⁱⁱⁱ⁾		Total
Year Ending December 31:
2019	$	1,287	$	80,083	$	26,271	$	107,641
2020		—		80,303		22,886		103,189
2021		—		80,083		18,147		98,230
2022		—		80,083		20,440		100,523
2023		—		80,083		18,515		98,598
Thereafter		—		700,549		61,923		762,472
Total	$	1,287	$	1,101,184	$	168,182	$	1,270,653

(i)

Drilling rig commitments -The Company had contracts for the service of two rigs, which have both expired and the Company has entered into well-to-well contracts. The values in the table represent the gross amounts that the Company is committed to pay and does not deduct amounts that other parties are responsible for as a result of cost sharing arrangements with working interest partners. The Company will record in its consolidated financial statements the Company’s proportionate share of costs based on its working interest, as applicable.

(ii)

Firm transportation -The Company has entered into firm transportation agreements with various pipelines in order to facilitate the delivery of production to market. These contracts commit the Company to transport minimum daily natural gas volumes at a negotiated rate, or pay for any deficiencies at a specified reservation fee rate. The amounts in this table represent the minimum daily volumes at the reservation fee rate. The values in the table represent the gross amounts that the Company is committed to pay and does not deduct amounts that other parties are responsible for as a result of cost sharing arrangements with working interest partners. The Company will record in its consolidated financial statements the Company’s proportionate share of costs based on its working interest.

(iii)

Gas processing, gathering, and compression services -Contractual commitments for gas processing, gathering and compression service agreements represent minimum commitments under long-term gas processing agreements as well as various gas compression agreements. The values in the table represent the gross amounts that the Company is committed to pay and does not deduct amounts that other parties are responsible for as a result of cost sharing arrangements with working interest partners. The Company will record in its consolidated financial statements its proportionate share of costs based on the Company’s working interest.