Commitments and Contingencies

12 Months Ended

Dec. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

Note 12 — Commitments and Contingencies

Legal Proceedings and Other Contingencies

From time to time, the Company is involved in litigation, regulatory examinations and administrative proceedings primarily arising in the ordinary course of business in jurisdictions in which the Company does business. Although the outcome of these matters cannot be predicted with certainty, the Company’s 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 the Company’s results from operations for a specific interim period or year.

On March 23, 2022, the Company entered into a settlement agreement to receive $27.5 million to resolve previously pending litigation, which was filed on October 23, 2017, against a third-party supplier related to quality issues. As part of the settlement agreement, the Company released all of its claims in the litigation. The settlement is reflected as “Other income (expense)” on the Consolidated Statements of Operations.

Performance Obligations

Regulations with respect to the Company's operations govern, among other things, engineering and construction specifications for production facilities, safety procedures, plugging and abandonment of wells, removal of facilities in the U.S. Gulf of Mexico and certain obligations under the production sharing contracts with Mexico.

As of December 31, 2022, the Company had secured performance bonds from third party sureties totaling $740.6 million. The cost of securing these bonds is reflected as “Interest expense” on the Consolidated Statements of Operations. Additionally, as of December 31, 2022, the Company had secured letters of credit issued under its Bank Credit Facility totaling $3.9 million. Letters of credit that are outstanding reduce the available revolving credit commitments. See Note 7 — Debt for further information on the Bank Credit Facility.

The table below summarizes the Company’s total minimum commitments associated with vessel commitments, purchase obligations and other miscellaneous commitments as of December 31, 2022 (in thousands):


	2023		2024		2025		2026		Thereafter		Total
Vessel Commitments(1)	$	41,938	$	—	$	—	$	—	$	—	$	41,938
Committed purchase orders(2)		41,148		—		—		—		—		41,148
EnVen Acquisition(3)		259,858		—		—		—		—		259,858
Other commitments(4)		9,627		327		327		—		—		10,281
Total	$	352,571	$	327	$	327	$	—	$	—	$	353,225

(1)

Includes vessel commitments the Company will utilize for certain Deepwater well intervention, drilling operations and decommissioning activities. These commitments represent gross contractual obligations and accordingly, other joint owners in the properties operated by the Company will be billed for their working interest share of such costs.

(2)

Includes committed purchase orders to execute planned future drilling activities. These commitments represent gross contractual obligations and accordingly, other joint owners in the properties operated by the Company will be billed for their working interest share of such costs.

(3)

Includes cash consideration and contingent fees related to the EnVen Acquisition. See Note 15 — Subsequent Events for further information on the EnVen Acquisition.

(4)

Includes commitment to acquire additional lease acreage associated with our CCS Segment.

Decommissioning Obligations

The Company has divested various leases, wells and facilities located in the U.S. Gulf of Mexico where the purchasers typically assume all abandonment obligations acquired. Certain of these counterparties in these divestiture transactions or third parties in existing leases have filed for bankruptcy protection or undergone associated reorganizations and may not be able to perform required abandonment obligations. Under certain circumstances, regulations or federal laws could require the Company to assume such obligations. The Company reflects expenses incurred related to estimated decommissioning obligations in “Other operating (income) expense” on the Consolidated Statements of Operations.

The decommissioning obligations included in the Consolidated Balance Sheets as “Other current liabilities” and “Other long-term liabilities”, and the changes in that liability were as follows (in thousands):


	Year Ended December 31,
	2022			2021		2020
Balance, beginning of period	$	24,336		$	—	$	—
Additions		8,900			21,056		—
Changes in estimate		22,658			—		—
Reimbursements due from third parties		—			3,280		—
Settlements		(1,625	)		—		—
Balance, end of period	$	54,269		$	24,336	$	—
Less: Current portion		42,069			3,756		—
Long-term portion	$	12,200		$	20,580	$	—

Although it is reasonably possible that the Company could receive state or federal decommissioning orders in the future or be notified of defaulting third parties in existing leases, the Company cannot predict with certainty, if, how or when such orders or notices will be resolved or estimate a possible loss or range of loss that may result from such orders. However, the Company could incur judgments, enter into settlements or revise our opinion regarding the outcome of certain notices or matters, and such developments could have a material adverse effect on our results of operations in the period in which the amounts are accrued and our cash flows in the period in which the amounts are paid.