NOTE F—COMMITMENTS AND CONTINGENCIES

General Commitments

The Company has entered into various commitments and operating agreements related to development and production of certain oil and gas properties. It is management's belief that such commitments, as stated below, will be met without significant adverse impact to the Company's financial position or results of operations.

Leases

The Company leases corporate office space in Denver, Colorado, which expires in August 2021. The Company leases oil and gas administrative offices located in New York City, New York, Houston, Texas and Plano, Texas which expire in March 2016, August 2016 and January 2017, respectively. The Company leases field office space in Rawlins, Wyoming, which expired in March 2015 and is currently in month to month status. The Company leases office space in Long Beach, California which expires in September 2020. The Company leases office space in Tunkhannock, Pennsylvania which expires in August 2019. The Company also leases office space in Casper, Wyoming on a month to month basis.

Future minimum annual rental payments, which are subject to escalation and include utility charges as of December 31, 2015, are as follows:

	(in thousands)
Year ending December 31:
2016	$	901
2017		648
2018		623
2019		635
2020		531
Thereafter		141

	$	3,479

Rent expense under these leases was approximately $1.08 million and $960 thousand for the years ended December 31, 2015 and 2014, respectively.

Lateral Demand and Commodity Fees

Contract stipulated $92,000 per month for a period of 35 months (11 months remain on the contract), for gathering services provided in the Marcellus. The contract also call for several additional fees, not included in the calculation of commitment fees. The additional fees include a Lateral Commodity Fee of $0.055 per Mcf up to 150 Bcf of gas gathered, Gathering Commodity Rate of $0.04 per Mcf up to 15,000 Mcf per day per month for certain receipt points, a Gathering Demand Rate of $0.10 per Mcf up to 15,000 Mcf per day per month for certain receipt points, and a Compression Fee of $0.205 per Mcf of gas delivered to certain receipt points. For any amount in excess of the 15,000 Mcf delivered to certain receipt points for the Gathering Demand and Commodity Rates the Company is obligated to pay 50% of the fees which are adjusted for inflation annually by the CPI index.

Transportation Fee

Contract stipulated fixed monthly amount of $1,241,000 for transportation of gas through the interstate pipeline, up to 120,000 dekatherms per day for a term ending in December 2021 (72 months remain on the contract). If the Company exceeds 120,000 dekatherms per day, the agreement states that a monthly fee of $0.34 per dekatherm over the contractually stipulated amount should be paid. Warren accounts for the aforementioned gathering and transportation fees on the Consolidated Statements of Operations within the lease operating expenses and taxes line item, as incurred. No overage fees have been included in the calculation of transportation fees.

Legal Proceedings

On November 3, 2014, Warren E&P was named as a defendant in a lawsuit in the Los Angeles County Superior Court, captioned Brandt Haas v. Warren E&P, Inc., Case No. BC562435, involving a claim disputing royalty payments made from the Company's operation at the Wilmington Townlot Unit. The plaintiff seeks to certify a class of all Wilmington Townlot Unit royalty owners who have received royalty payments since November 2010. The Company filed a Demurrer to plaintiff’s complaint in June 2015, principally on the grounds that the complaint failed to identify the contract or contracts giving rise to the plaintiff’s claims. The court granted the Company’s Demurrer on December 1, 2015. The plaintiff filed an amended complaint on December 21, 2015, alleging that he and each of the putative class members have one or more contracts with the defendant for the payment of royalties. Plaintiff alleges that the Company breached those contracts by excessively deducting from royalty payments improper fees, costs or expenses. The plaintiff also alleges causes of action for unjust enrichment and a violation of the California Unfair Competition Act, both based solely upon the Company’s alleged breach of contract. On January 29, 2016, Warren filed an answer, along with a counterclaim seeking to recover from plaintiff any expenses incurred that properly should have been charged against royalty payments but were not charged. Warren is preparing and expects to file in mid-April 2016 a motion for summary adjudication, seeking a ruling that it was appropriate for defendant to recoup from royalty payments amounts owed by royalty owners. Discovery has been stayed pending this filing, and the Company is unable to estimate a possible loss, or range of possible loss, if any, in this case.

We are party to a variety of legal, administrative, regulatory and government proceedings, claims and inquiries arising in the normal course of business. While the results of these proceedings, claims and inquiries cannot be predicted with certainty, management believes that the ultimate outcome of such matters will not have a material effect on the Company's financial condition or results of operations.