Commitments and Contingencies

3 Months Ended

Mar. 31, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Included below is a discussion of certain future commitments and contingencies of the Company as of March 31, 2020.

Drilling rig commitments – As of March 31, 2020, the Company has drilling rig contracts with various terms extending to April 2021. Future operating day-rate commitments as of March 31, 2020 total approximately $36 million, of which $33 million is expected to be incurred in the remainder of 2020 and $3 million will be incurred in 2021. A portion of these future costs will be borne by other interest owners. Such future commitments include minimum payment obligations with a discounted present value totaling $6.0 million that are required to be recognized on the Company's balance sheet at March 31, 2020 in accordance with ASC Topic 842 as discussed in Note 9. Leases.

Other lease commitments – The Company has various other lease commitments primarily associated with surface use agreements and field equipment. See Note 9. Leases for additional information.

Transportation, gathering, and processing commitments – The Company has entered into transportation, gathering, and processing commitments to guarantee capacity on crude oil and natural gas pipelines and natural gas processing facilities. The commitments, which have varying terms extending as far as 2031, require the Company to pay per-unit transportation, gathering, or processing charges regardless of the amount of capacity used. Future commitments remaining as of March 31, 2020 under the arrangements amount to approximately $2.11 billion, of which $210 million is expected to be incurred in the remainder of 2020, $326 million in 2021, $329 million in 2022, $331 million in 2023, $298 million in 2024, and $615 million thereafter. A portion of these future costs will be borne by other interest owners. The Company is not committed under the above contracts to deliver fixed and determinable quantities of crude oil or natural gas in the future. These commitments do not qualify as leases under ASC Topic 842 and are not recognized on the Company's balance sheet.

Litigation – The Company is involved in various legal proceedings including, but not limited to, commercial disputes, claims from royalty and surface owners, property damage claims, personal injury claims, regulatory compliance matters, disputes with tax authorities and other matters. As of March 31, 2020 and December 31, 2019, the Company had recognized a liability within “Other noncurrent liabilities” of $7.5 million and $8.7 million, respectively, for various matters, none of which are believed to be individually significant. See Note 14. Subsequent Events for discussion of a new legal matter involving the Company that was initiated subsequent to March 31, 2020.

Environmental risk – Due to the nature of the crude oil and natural gas business, the Company is exposed to possible environmental risks. The Company is not aware of any material environmental issues or claims.