Commitments and Contingencies

12 Months Ended

Dec. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

The Company is involved in various commercial and regulatory claims, litigation and other legal proceedings that arise in the ordinary course of its business. In each reporting period, the Company assesses these claims in an effort to determine the degree of probability and range of possible loss for potential accrual in its Consolidated Financial Statements. In accordance with ASC 450, Contingencies, an accrual is recorded for a material loss contingency when its occurrence is probable and damages are reasonably estimable based on the anticipated most likely outcome or the minimum amount within a range of possible outcomes.

Legal proceedings are inherently unpredictable and unfavorable resolutions can occur. Assessing contingencies is highly subjective and requires judgment about uncertain future events. When evaluating contingencies related to legal proceedings, the Company may be unable to estimate losses due to a number of factors, including potential defenses, the procedural status of the matter in question, the presence of complex legal and/or factual issues, the ongoing discovery and/or development of information important to the matter.

Mabee Ranch Royalty Partnership Litigation – In October, 2017, the owners of certain surface and mineral interests in Martin and Andrews County, Texas, filed suit against QEP, alleging QEP improperly used the surface of the properties and failed to correctly pay royalties, and seeking money damages and a declaratory judgment that portions of the oil and gas leases covering the properties are no longer in effect.

Mandan, Hidatsa and Arikara Nation ("MHA Nation") Title Dispute – In June 2018, the MHA Nation notified QEP of its position that QEP has no valid lease covering certain minerals underlying the Missouri and Little Missouri Riverbeds on the Fort Berthold Reservation in North Dakota. The MHA Nation also passed a resolution purporting to rescind those portions of QEP's IMDA lease covering the disputed minerals underlying the Missouri River.

Overriding Royalty Interest Litigation – In July 2019, owners of small overriding royalty interests in certain wells in the South Antelope oil and gas field in North Dakota filed suit against QEP, alleging QEP has improperly taken deductions for post-production expenses.

The Company is unable to make an estimate of the range of reasonably possible loss related to its contingencies.

Commitments

QEP has contracted for gathering, processing and firm transportation services with various third parties. Market conditions, drilling activity and competition may prevent full utilization of the contractual capacity. In addition, QEP has contracts with third parties who provide drilling services. Annual payments and the corresponding years for gathering, processing, transportation, drilling and fractionation contracts are as follows:



Year	Amount
	(in millions)
2020	$	25.2
2021	$	23.8
2022	$	19.4
2023	$	9.5
2024	$	5.6
After 2024	$	7.2

QEP has entered into contractual lease arrangements to rent office space, compressors, generators, and other equipment from third-party lessors. On January 1, 2019, QEP adopted ASC Topic 842, Leases, using the modified retrospective approach. Refer to Note 8 – Leases for additional information. Expense from operating leases were $25.3 million, $30.3 million and $24.9 million during the years ended December 31, 2019, 2018 and 2017, respectively. Amounts for 2018 and 2017 are reported in accordance with historical accounting treatment under ASC Topic 840, Leases.

As of December 31, 2019, the maturity analysis for long-term operating leases under the scope of ASC 842 are as follows:



Year	Amount
	(in millions)
2020	$	22.3
2021	$	20.4
2022	$	15.9
2023	$	10.6
2024	$	1.4
After 2024	$	2.4
Less: Interest⁽¹⁾	$	(10.2	)
Present Value of Lease Liabilities⁽²⁾	$	62.8

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⁽¹⁾	Calculated using the estimated or stated interest rate for each lease.


⁽²⁾	Of the total present value of lease liabilities, $18.0 million was recorded in "Current operating lease liabilities" and $44.8 million was recorded in "Operating lease liabilities" on the Consolidated Balance Sheets.

As of December 31, 2018, minimum future contractual payments for long-term operating leases under the scope of ASC 840 are as follows:



Year	Amount
	(in millions)
2019	$	17.4
2020	$	13.8
2021	$	9.1
2022	$	7.4
2023	$	4.5
After 2023	$	—