Exit Activities

We have committed to a number of actions, or exit activities, consistent with our current business plans and certain legacy actions from prior periods for which we have continuing financial commitments. The most significant of these activities are attributable to an overall reduction in the scope and scale of our organization and require payments to satisfy obligations associated with the underlying commitments. The following summarizes our most significant exit activities.

Reductions in Force

In connection with efforts to reduce our administrative costs and to appropriately size our organization for emergence from bankruptcy, we have taken certain actions to reduce our total employee headcount. We incurred costs for severance and termination benefits in the amount of $0.8 million in February 2016 in connection with the termination of 10 employees. We reduced our total employee headcount by an additional 18 employees in June 2016 and incurred severance and termination benefits in the amount of $0.3 million. We paid a total of $0.7 million attributable to these reductions in force during the period ending June 30, 2016 leaving $0.4 million outstanding as of June 30, 2016. As this remaining amount relates entirely to a pre-petition obligation, it has been included in “Liabilities subject to compromise” on our Condensed Consolidated Balance Sheet as of June 30, 2016.

We have committed to a further reduction in force by 26 employees to be completed upon the earlier of our emergence from bankruptcy or October 31, 2016. In connection with this action, we anticipate paying a total of $1.7 million, including $1.2 million in severance and termination benefits and $0.5 million in retention bonuses. The affected employees must continue to provide services through the aforementioned term in order to receive these benefits. Accordingly, we incurred a charge and established an accrual representing the period for which these benefits have been earned.

The costs associated with these reduction-in-force and retention actions are included as a component of our “General and administrative” expenses. The related obligations, with the exception of the aforementioned $0.4 million pre-petition obligation, are included in “Accounts payable and accrued liabilities” on our Condensed Consolidated Balance Sheet.

Drilling Rig Termination

In connection with the suspension of our 2016 drilling program in the Eagle Ford, we terminated our one remaining drilling rig contract and incurred $1.3 million in early termination charges. This charge was recorded as a component of exploration expense for the periods ended June 30, 2016. Because this contract termination gave rise to a pre-petition commitment, which remains unpaid at June 30, 2016, the associated obligation has been included in “Liabilities subject to compromise” on our Condensed Consolidated Balance Sheet as of June 30, 2016.

Firm Transportation Obligation

We have a contractual obligation for certain firm transportation capacity in the Appalachian region that expires in 2022 and, as a result of the sale of our natural gas assets in West Virginia, Kentucky and Virginia in 2012, we no longer have production to satisfy this commitment. While we sell our unused firm transportation to the extent possible, we recognized an obligation in 2012 representing the liability for estimated discounted future net cash outflows over the remaining term of the contract.

The following table reconciles the firm transportation obligation as of the dates presented:



	As of
	June 30,			December 31,
	2016			2015
Balance at beginning of period	$	13,461		$	14,790
Accretion	317			942
Cash payments, net	(1,059		)	(2,271		)
Balance at end of period	$	12,719		$	13,461

The accretion of the obligation, net of any recoveries from periodic sales of our contractual capacity, has been charged as an offset to Other revenue. In connection with our bankruptcy filing, we have rejected the underlying contract associated with this obligation. Accordingly, we suspended the accretion effective May 12, 2016 and have included the entire obligation in “Liabilities subject to compromise” on our Condensed Consolidated Balance Sheet as of June 30, 2016.