Commitments And Contingencies

12 Months Ended

Dec. 31, 2012

Commitments And Contingencies [Abstract]

Commitments And Contingencies

9. Commitments and Contingencies

     The Company is a party to lawsuits in the ordinary course of its business. The Company does not believe that it is probable that the outcome of any individual action will have a material adverse effect, or that it is likely that adverse outcomes of individually insignificant actions will be significant enough, in number or magnitude, to have in the aggregate a material adverse effect on its financial statements. On March 1, 2010, the Company entered into a lease for office space in Knoxville, Tennessee. The term of the lease is 41 months (five of which are free) and expires on July 31, 2013. The payment on this lease was $7,284 per month through December 2011 and is $7,294 per month for the remainder of the lease. Future non-cancellable commitments related to this lease total approximately $51,000 due in 2013.

     Office rent expense for each of the three years ended December 31, 2012, 2011, and 2010 was $0.1 million.

     The Company as designated operator was administratively issued an "Incidence of Non-Compliance" by BOEM concerning one of the Hoactzin wells operated by the Company pursuant to the Management Agreement. This action calls for payment of a civil penalty of $386,000 for the late filing of certain reports in 2011 by a contractor on the facility. The Company has filed an appeal of this action in order to attempt to significantly reduce the civil penalty. This appeal required a fully collateralized appeal bond to stay payment of the obligation until the appeal is determined. On November 1, 2012, the Company posted and collateralized this bond with RLI Insurance Company. If the bond was not posted, the appeal would be administratively denied and the order to the Company as operator to pay the $386,000 penalty would be final. While the Company believes it will ultimately prevail in the appeal process, it is reasonably possible to expect that the Company may be required to pay a portion of this penalty. The Company estimates the range of this possible payment to be between zero and $386,000.