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Commitments and Contingencies
12 Months Ended
Dec. 31, 2014
Commitements And Contingencies Disclosures [Abstract]  
COMMITMENTS AND CONTINGENCIES

11. COMMITMENTS AND CONTINGENCIES:

Transportation contract.  The Company is an anchor shipper on REX securing pipeline infrastructure providing sufficient capacity to transport a portion of its natural gas production away from southwest Wyoming and to provide for reasonable basis differentials for its natural gas in the future. REX begins at the Opal Processing Plant in southwest Wyoming and traverses Wyoming and several other states to an ultimate terminus in eastern Ohio. The Company’s commitment involves a capacity of 200 MMMBtu per day of natural gas through November 2019, and the Company is obligated to pay REX certain demand charges related to its rights to hold this firm transportation capacity as an anchor shipper.

Subsequently, the Company entered into agreements to secure an additional capacity of 50 MMMBtu per day on the REX pipeline system, beginning in January 2012 through December 2018. This additional capacity provides the Company with the ability to move additional volumes from its producing wells in Wyoming to markets in the eastern U.S.

The Company currently projects that demand charges related to the remaining term of the contract will total approximately $469.0 million.

Operating lease. During December 2012, the Company sold its system of pipelines and central gathering facilities (the “LGS”) and certain associated real property rights in the Pinedale Anticline in Wyoming and entered into a long-term, triple net lease agreement (the “Lease Agreement”) relating to the use of the LGS. The Lease Agreement provides for an initial term of 15 years and potential successive renewal terms of 5 years or 75% of the then remaining useful life of the LGS at the sole discretion of the Company. Annual rent for the initial term under the Lease Agreement is $20.0 million (as adjusted annually for changes based on the consumer price index) and may increase if certain volume thresholds are exceeded. The lease is classified as an operating lease. The Company currently projects that lease payments related to the Lease Agreement will total approximately $268.0 million.

All of the Company’s lease obligations are related to leases that are classified as operating leases.  These leases contain certain provisions that could result in accelerated lease payments.  The Company has considered the effect of these provisions on minimum lease payments in its lease classification analysis and has determined that the default provisions do not impact classification of any the Company’s operating leases.

Drilling contracts.  As of December 31, 2014, the Company had committed to drilling obligations totaling $33.0 million ($31.6 million in 2015 and the remainder in 2016). The commitments expire in 2016 and were entered into to fulfill the Company’s drilling program initiatives.

Office space lease.  The Company maintains office space in Colorado, Texas, Wyoming and Pennsylvania with total remaining commitments for office leases of $8.6 million at December 31, 2014 ($1.0 million in 2015; $1.3 million in 2016; $1.3 million in 2017; $1.2 million in 2018; and $1.1 million in 2019 with the remainder due beyond five years).

During the years ended December 31, 2014, 2013 and 2012, the Company recognized expense associated with its office leases in the amount of $1.0 million, $1.0 million, and $1.0 million, respectively.

Delivery Commitments. With respect to the Company’s natural gas production, from time to time the Company enters into transactions to deliver specified quantities of gas to its customers. As of February 9, 2015, the Company has long-term natural gas delivery commitments of 1.2 MMMBtu in 2015, 26.2 MMMBtu in 2016, and 7.9 MMMBtu in 2017 under existing agreements. As of February 9, 2015, the Company has long-term crude oil delivery commitments of 2.4 MMBbls in 2015, 2.4 MMBbls in 2016, 1.7 MMBbls in 2017, 0.7 MMBbls in 2018 and 0.2 MMBbls in 2019 under existing agreements. None of these commitments require the Company to deliver gas or oil produced specifically from any of the Company’s properties, and all of these commitments are priced on a floating basis with reference to an index price.

These committed volumes are below the Company’s forecasted 2015 and anticipated 2016 through 2019 production from its available reserves. In addition, none of the Company’s reserves are subject to any priorities or curtailments that may affect quantities delivered to its customers, any priority allocations or price limitations imposed by federal or state regulatory agencies or any other factors beyond the Company’s control that may affect its ability to meet its contractual obligations other than those discussed in Item 1A. “Risk Factors”. The Company believes that its reserves are adequate to meet its commitments. If for some reason the Company’s production is not sufficient to satisfy its commitments, the Company expects to be able to purchase volumes in the market or make other arrangements to satisfy its commitments.

Other.  The Company is currently involved in various routine disputes and allegations incidental to its business operations. While it is not possible to determine the ultimate disposition of these matters, management, after consultation with legal counsel, is of the opinion that the final resolution of all such currently pending or threatened litigation is not likely to have a material adverse effect on the consolidated financial position, results of operations or cash flows of the Company.