Note 14 – Commitment and Contingencies

We have entered into employment agreements with certain of our executives and officers. The term of the agreements generally ranges from one to two years and provides for renewal provisions in one-year increments thereafter. The agreements provide for, among other items, severance and continuation of benefit payments upon termination of employment or certain change of control events.

We have entered into long-term firm transportation contracts to ensure the transport for certain of our gas production to purchasers. Firm transportation volumes and the related demand charges for the remaining term of these contracts at September 30, 2018 are summarized in the table below.

Period	Dekatherms per day		Demand Charges
October 2018 - March 2020		3,230	$	0.20 - $0.62
April 2020 - May 2020		2,150	$	0.20
June 2020 - May 2036		1,000	$	0.20

A liability of approximately $166,000 related to firm transportation contracts assumed in the EXCO Acquisition in 2016, is reflected on our unaudited consolidated balance sheets as of September 30, 2018. The fair value of these firm transportation obligations was determined based upon the contractual obligations assumed upon acquisition by us and discounted based upon our effective borrowing rate. These contractual obligations are being amortized monthly as they become due.

Capital Commitment

In our participation as a Class A member of Carbon Appalachia we made a capital commitment of $23.6 million, of which we have contributed $6.9 million as of September 30, 2018.

As of September 30, 2018, we had no capital commitments associated with Carbon California.

Contingency

During March 2018, we became aware through our internal control system that one of our field employees had been misappropriating funds from our suspended revenue accounts over a period of several years. Upon the discovery of the misappropriation, we terminated the employee and engaged an external forensic specialist to lead an investigation to determine the extent of the misappropriation and the impact on our financial statements. The investigation determined that the employee’s ability to misappropriate funds from the suspense accounts was eliminated in 2017 when we instituted our current revenue accounting practices and internal controls.

We have recorded a provision at September 30, 2018, to reflect the estimated loss of suspended revenue. We have determined that this event constituted a significant deficiency.