Commitments and Contingencies

Litigation

Lonestar is subject to certain claims and litigation arising in the normal course of business. In the opinion of management, the outcome of such matters will not have a materially adverse effect on the consolidated results of operations or financial position of the Company.

Environmental Remediation

Various federal, state, and local laws and regulations covering the discharge of materials into the environment, or otherwise relating to the protection of the environment, may affect the Company’s operations and the costs of its oil and gas exploration, development, and production operations. The Company does not anticipate that it will be required in the near future to expend significant amounts in relation to the consolidated financial statements taken as a whole by reason of environmental laws and regulations, and appropriately no reserves have been recorded.

Office Lease

The Company entered into an operating lease agreement for its former corporate office in October 2014 which will expire in October 2021. Future minimum annual lease payments are as follows:



In thousands	Future Minimum Payments
2019	$	422
2020	432
2021	368
Total minimum lease payments	$	1,222

Rent payments associated with this property were approximately $412 thousand and $439 thousand for the years ended December 31, 2018 and 2017, respectively. The Company relocated its corporate office to an owned building in February 2018 but will continue to be responsible for the minimum annual lease payments noted above regardless of subrental income, if any, the Company will receive from the property going forward. See Note 3. Acquisitions and Divestitures for more information.

Significant Contracts

Lonestar currently has two drilling rigs under contract, each of which provides for a drilling rate of $22.5 thousand per day. The first rig contract commenced in January 2019 and terminates in July 2019 with an early termination fee of $7.0 thousand per day times the remaining number of days left on the contract after the termination date. The second rig contract is an evergreen contract that requires a 30-days cancellation notice with no early termination fees.

In November 2018, the Company signed a dedicated fleet contract that provides for hydraulic fracturing and wireline services at variable rates depending on the work performed. The contract provides for services to cover fourteen wells planned to be drilled during 2019 and expires on December 31, 2019 with no further provisions for early termination. The Company has the ability to further extend the contract on any additional wells added to the 2019 drilling schedule through the expiration date of the contract.