Commitments and Contingencies

The following table sets forth our significant commitments as of December 31, 2015, by category, for the next five years and thereafter:



Year	Minimum Rentals		Drilling and Completion		Gathering and Intermediate Transportation		Firm Transportation		Drilling Carry		Other Commitments
2016	$	2,606	$	3,984	$	15,328	$	1,098	$	1,900	$	459
2017	2,542		—		12,319		1,095		8,764		274
2018	2,329		—		12,319		1,095		—		71
2019	1,341		—		12,319		1,095		—		—
2020	—		—		12,352		1,098		—		—
Thereafter	—		—		63,652		8,580		—		—
Total	$	8,818	$	3,984	$	128,289	$	14,061	$	10,664	$	804

Rental Commitments

Operating lease rental expense in the years ended December 31, 2015, 2014 and 2013 was $7.2 million, $8.7 million and $9.4 million, respectively, related primarily to field equipment, office equipment and office leases.

Drilling and Completion Commitments

In December 2015, we renegotiated an existing contractual commitment for our one remaining operated drilling rig to a lower daily rate and extended the expiration from February 2016 to August 2016. The remaining commitment under the new agreement was $3.4 million as of December 31, 2015. In September 2015, we renegotiated an existing commitment to purchase certain coiled tubing services at a lower rate and extended the expiration from December 31, 2015 to June 30, 2016. The minimum commitment remaining under this agreement was $0.6 million as of December 31, 2015. The drilling rig and coiled tubing services agreements include early termination provisions that would require us to pay penalties if we terminate the agreements prior to the end of their scheduled terms. The amount of the penalty is based on the number of days remaining in the contractual term. The penalty amount would have been $2.5 million had we had terminated our agreements on December 31, 2015.

In 2015, we reduced our total drilling rig count from eight to one. We incurred a total of $5.9 million in early termination charges with respect to these terminations in the year ended December 31, 2015, which have been reported as a component of Exploration expense on our Consolidated Statement of Operations.

Gathering and Intermediate Transportation Commitments

We have a long-term agreement for natural gas gathering, compression and gas lift services for a substantial portion of our natural gas production in the South Texas region through 2039. The agreement requires us to make certain minimum payments regardless of the volume of natural gas production for the first three years of the term. The minimum fee requirement remaining under this agreement is $5.0 million for 2016.

We also have long-term agreements for gathering and intermediate pipeline transportation services for a substantial portion of our crude oil and condensate production in the South Texas region. Our payment obligations with respect to these services begin after the system has been constructed and is operational, which is currently expected in the first half of 2016. The agreements also require us to commit certain minimum volumes of crude oil production for the first ten years of the agreements’ terms, which will result in minimum fee requirements of approximately $12.3 million on an annual basis.

Firm Transportation Commitments

We have entered into contracts that provide firm transportation capacity rights for specified volumes per day on various pipeline systems with terms that range from 1 to 13 years. The contracts require us to pay transportation demand charges regardless of the amount of the pipeline capacity we use. We may sell excess capacity to third parties at our discretion.

Drilling Carry

In connection with our August 2014 acquisition of undeveloped acreage in the Eagle Ford in Lavaca County, Texas, we committed to providing a drilling carry in the amount of $10.7 million to support development of this acreage through July 2017. If we have not incurred certain amounts of the drilling carry by certain dates in 2016 and 2017, we will be required to make a cash payment to the seller to satisfy any shortfall.

Other Commitments

We have entered into certain contractual arrangements for other products and services. We have minimum commitments under information technology licensing and service agreements, among others.

Legal

We are involved, from time to time, in various legal proceedings arising in the ordinary course of business. While the ultimate results of these proceedings cannot be predicted with certainty, our management believes that these claims will not have a material effect on our financial position, results of operations or cash flows. During 2010, we established a $0.9 million reserve for a litigation matter pertaining to certain properties that remains outstanding as of December 31, 2015.

Environmental Compliance

Extensive federal, state and local laws govern oil and gas operations, regulate the discharge of materials into the environment or otherwise relate to the protection of the environment. Numerous governmental departments issue rules and regulations to implement and enforce such laws that are often difficult and costly to comply with and which carry substantial administrative, civil and even criminal penalties for failure to comply. Some laws, rules and regulations relating to protection of the environment may, in certain circumstances, impose “strict liability” for environmental contamination, rendering a person liable for environmental and natural resource damages and cleanup costs without regard to negligence or fault on the part of such person. Other laws, rules and regulations may restrict the rate of oil and gas production below the rate that would otherwise exist or even prohibit exploration or production activities in sensitive areas. In addition, state laws often require some form of remedial action to prevent pollution from former operations, such as plugging of abandoned wells. As of December 31, 2015, we have recorded AROs of $2.6 million attributable to these activities. The regulatory burden on the oil and gas industry increases its cost of doing business and consequently affects its profitability. These laws, rules and regulations affect our operations, as well as the oil and gas exploration and production industry in general. We believe that we are in substantial compliance with current applicable environmental laws, rules and regulations and that continued compliance with existing requirements will not have a material impact on our financial condition or results of operations. Nevertheless, changes in existing environmental laws or the adoption of new environmental laws, including any significant limitation on the use of hydraulic fracturing, have the potential to adversely affect our operations.