Commitments and Contingencies

3 Months Ended

Mar. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

CONSOL Carried Cost Obligation In accordance with our Marcellus Shale joint venture arrangement with a subsidiary of CONSOL Energy Inc. (CONSOL), we agreed to fund one-third of CONSOL's 50% working interest share of future drilling and completion costs, capped at $400 million each year, up to approximately $2.1 billion (CONSOL Carried Cost Obligation).

The CONSOL Carried Cost Obligation is suspended if average Henry Hub natural gas prices fall and remain below $4.00 per MMBtu in any three consecutive month period and remain suspended until average Henry Hub natural gas prices are above $4.00 per MMBtu for three consecutive months. Due to low natural gas prices, the CONSOL Carried Cost Obligation has been suspended since the end of 2011. However, due to recent increases in Henry Hub natural gas prices, we began funding a portion of CONSOL's working interest share of certain drilling and completion costs as of March 1, 2014. Based on the March 31, 2014 NYMEX Henry Hub natural gas price curve and current development plans, we forecast funding approximately $235 million in 2014.

Marcellus Shale Firm Transportation Agreements In February 2014, we signed Precedent Agreements for Firm Transportation (the Agreements) to flow 150,000 MMBtu per day of our Marcellus Shale natural gas production to Gulf Coast markets. The Agreements are for transportation services on new pipeline extensions, to be constructed by, and connecting to, an existing third-party system. The pipeline extensions are expected to be complete and operational in June of 2017. Our financial commitment totals approximately $765 million, undiscounted, over a 15-year period. The Agreements are subject to various conditions, including regulatory approval of the pipeline extension projects.

Legal Proceedings  We are involved in various legal proceedings in the ordinary course of business.  These proceedings are subject to the uncertainties inherent in any litigation.  We are defending ourselves vigorously in all such matters and we believe that the ultimate disposition of such proceedings will not have a material adverse effect on our financial position, results of operations or cash flows.