Commitments and Contingencies

9 Months Ended

Jun. 30, 2013

Commitments and Contingencies

6. COMMITMENTS AND CONTINGENCIES

From time to time, the Company is a party to various legal proceedings arising in the ordinary course of business. Although the Company cannot predict the outcomes of any such legal proceedings, management believes that the resolution of pending legal actions will not have a material adverse effect on the Company’s financial condition, results of operations or liquidity, as the Company believes it is adequately indemnified and insured.

The Company experiences contractual disputes with its clients from time to time regarding the payment of invoices or other matters. While the Company seeks to minimize these disputes and maintain good relations with its clients, the Company has in the past, and may in the future, experience disputes that could affect its revenues and results of operations in any period.

The Company has non-cancelable operating leases for office space in Midland, Houston, Denver, Oklahoma City, Pittsburgh and Calgary, Alberta.

The following table summarizes payments due in specific periods related to the Company’s contractual obligations with initial terms exceeding one year as of June 30, 2013.

	Payments Due by Period (in 000’s)
	Total		Within 1 Year		1-2 Years		3-5 Years		After 5 Years
Operating lease obligations (office space)	$	2,960	$	885	$	1,617	$	452	$	6

Some of the Company’s operating leases contain predetermined fixed increases of the minimum rental rate during the initial lease term. For these leases, the Company recognizes the related expense on a straight-line basis and records deferred rent as the difference between the amount charged to expense and the rent paid. Rental expense under the Company’s operating leases with initial terms exceeding one year was $227,000 and $211,000 for the three months ended June 30, 2013 and 2012, respectively, and $671,000 and $582,000 for the nine months ended June 30, 2013 and 2012, respectively.

As of July 3, 2013, the Company had unused letters of credit totaling $580,000. The Company’s letters of credit principally back obligations associated with the Company’s self-insured retention on workers’ compensation claims.