XML 44 R20.htm IDEA: XBRL DOCUMENT v3.6.0.2
Commitments and Contingencies
12 Months Ended
Dec. 31, 2016
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Text Block
Commitments and Contingencies

We have various commitments for firm transportation, operating lease agreements for office space and other agreements. As of December 31, 2016, future minimum payments under these non-cancelable agreements are as follows:
 
 
Firm
Transportation
 
Operating
Leases
(Office Space)
 
Drilling-Related
 
Other
 
Total
 
 
(In millions)
Year Ending December 31,
 
 
 
 
 
 
 
 
 
 
2017
 
$
74

 
$
21

 
$
64

 
$
16

 
$
175

2018
 
57

 
19

 
5

 
12

 
93

2019
 
45

 
16

 

 
9

 
70

2020
 
10

 
15

 

 
5

 
30

2021
 
3

 
15

 

 
4

 
22

Thereafter
 
4

 
2

 

 
20

 
26

Total minimum future payments
 
$
193

 
$
88

 
$
69

 
$
66

 
$
416



Firm transportation is comprised of various agreements with third parties for oil and gas gathering and transportation. Rent expense with respect to our lease commitments for office space for the years ended December 31, 2016, 2015 and 2014 was $21 million, $35 million and $20 million, respectively. Our other agreements are primarily other equipment leases. Payments under our drilling-related contracts are accounted for as capital additions to our oil and gas properties and could be less than the gross obligation disclosed.

We have crude oil minimum volume delivery commitments that relate to our Uinta Basin production with two Salt Lake City, Utah refiners. One delivery commitment is for approximately 15,000 barrels of oil per day through May 2020. The second commitment is for 20,000 barrels of oil per day through August 2025. As of December 31, 2016, our delivery commitments through 2025 were as follows: 
 
 
Oil
Year Ending December 31,
 
(MBbls)
2017
 
12,775

2018
 
12,775

2019
 
12,775

2020
 
9,600

2021
 
7,300

Thereafter
 
26,800

Total delivery commitments
 
82,025


 
Given the volatility in oil and natural gas prices and the related impact on our 2017 planned capital investments, as well as the potential impact on development plans in future years, we could fail to deliver the minimum production required under these commitments. In the event that we are unable to meet our crude oil volume delivery commitments, we would incur deficiency fees ranging from $3.50 to $6.50 per barrel. During 2016, we incurred $16 million of Uinta Basin deficiency fees.

Litigation

In May 2015, a lawsuit was filed against the Company alleging certain plugging and abandonment predecessor-in-interest liabilities related to offshore assets sold by the Company in 2010. The Company responded to the petition, denied the allegations and vigorously defended the case. The court held that the Company must bear a "portion" of the plugging and abandonment costs, but the "exact percentage" of such costs should be determined in arbitration and stayed the case pending arbitration. Through settlement negotiations surrounding the arbitration proceeding, the Company and the plaintiff reached a mutual settlement on September 23, 2016 involving a cash payment by the Company totaling $18 million. The settlement was recorded under the caption "Operating expenses — Other" on our consolidated statement of operations. On October 3, 2016, the court dismissed the case with prejudice.

We have been named as a defendant in a number of lawsuits and are involved in various other disputes, all arising in the ordinary course of our business, such as (a) claims from royalty owners for disputed royalty payments, (b) commercial disputes, (c) personal injury claims and (d) property damage claims. Although the outcome of these lawsuits and disputes cannot be predicted with certainty, we do not expect these matters to have a material adverse effect on our financial position, cash flows or results of operations.