Commitments and Contingencies

9 Months Ended

Sep. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and ContingenciesTransportation, 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. Certain of 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 September 30, 2022 under the arrangements amount to approximately $1.13 billion, of which $72 million is expected to be incurred in the remainder of 2022, $282 million in 2023, $262 million in 2024, $164 million in 2025, $139 million in 2026, and $214 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.

Strategic investment – See Note 13. Equity Investment for discussion of future spending commitments associated with a strategic investment announced by the Company in the first quarter of 2022.

Litigation

In December 2017, the Company filed an action in Garfield County, Oklahoma state court against Hiland Partners Holdings, LLC (“Hiland”), a subsidiary of Kinder Morgan, Inc. The Company alleged breach of contract and fraud. The parties entered into a settlement agreement in June 2018, under which Continental agreed to release its claims in exchange for Hiland’s construction of certain infrastructure projects by November 1, 2020. After such deadline passed, Continental filed an amended petition asserting the original claims and additional claims for breach of contract. On September 14, 2022, the parties entered into a confidential settlement agreement, including an unconditional release and dismissal of the litigation with prejudice.

In March 2022, the Company was named as a defendant in a case filed in the U.S. District Court for the Northern District of California by gasoline consumer plaintiffs alleging that, beginning in March 2020, the Company and the other named defendants conspired with Russia, OPEC and others to raise the price of oil and gasoline by reducing the supply of these products. The plaintiffs are seeking unspecified damages and injunctive relief. On July 1, 2022, the Company, together with other named defendants, filed motions to dismiss. The Company intends to vigorously defend the case.

The Company is involved in various other 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. While the outcome of these legal matters cannot be predicted with certainty, the Company does not expect them to have a material adverse effect on its financial condition, results of operations or cash flows. As of September 30, 2022, and December 31, 2021, the Company had recognized a liability within “Other noncurrent liabilities” of $10.1 million and $7.9 million, respectively, for various matters, none of which are believed to be individually significant.

Litigation pertaining to take-private transaction

Transactions such as the Hamm Family's proposed take-private transaction described in Note 1. Organization and Nature of Business—Recent Developments often attract litigation and demands from minority shareholders. On August 25, 2022, Walter T. Doggett, on behalf of himself and a class of all other similarly situated public shareholders of the Company (“Doggett”), filed a class action petition in the District Court of Oklahoma County in the State of Oklahoma against Harold G. Hamm, as the controlling shareholder of the Company, for alleged breaches of fiduciary duties in connection with the previously described take-private transaction. Doggett seeks, among other things: (i) an injunction against the consummation of the proposed transaction or, if the proposed transaction is consummated, monetary damages; (ii) reimbursement for the costs and disbursements of bringing the lawsuit, including reasonable attorneys’ and experts’ fees; and (iii) other equitable relief. Mr. Hamm intends to defend himself vigorously against this lawsuit.

On August 11, 2022, Pembroke Pines Firefighters & Police Officers Pension Fund (“Pembroke”), a beneficial owner of Company shares, delivered a letter (the “Request”) to the Company requesting the inspection of certain of its books and records to investigate potential breaches of fiduciary duties by the Company’s Board of Directors, senior management, and Mr. Hamm in connection with the proposed take-private transaction. On August 18, 2022, the Company responded. On October 20, 2022, Pembroke updated the Request, and the Company responded on October 27, 2022.

On October 26, 2022, Shiva Stein (“Stein”) filed a complaint in the United States District Court for the Southern District of New York against the Company, Harold G. Hamm, William B. Berry, Tim Taylor, John T. McNabb II, Lon McCain, Mark E. Monroe, and Shelly Lambertz (collectively, the “Company Parties”), for their alleged violations of Sections 14(e), 14(d), and 20(a) of the Securities Exchange Act of 1934, in connection with the proposed take-private transaction. Stein seeks, among other things: (i) an injunction against the consummation of the proposed transaction unless and until the disclosure of purported material information allegedly omitted from the Solicitation Statement; (ii) rescission of the Merger Agreement and monetary damages related thereto; (iii) an accounting of damages related to the Company Parties’ alleged wrongdoing; and (iv) the costs and disbursements of bringing the lawsuit, including reasonable attorneys’ and expert fees and expenses. The Company Parties intend to vigorously defend the lawsuit.

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.