Note 11 — Commitments and Contingencies and Other Matters

Commitments

Commitments Related to Expansion of Our Fleet

In March 2012, we executed a contract with a shipyard in Singapore for the construction of a newbuild semi-submersible well intervention vessel, the Q5000. This $386.5 million shipyard contract represents the majority of the expected costs associated with the construction of the Q5000. Pursuant to the terms of this contract, payments are made in a fixed percentage of the contract price, together with any variations, on contractually scheduled dates. The vessel is expected to be completed and placed in service in the third quarter of 2015. In September 2014, we entered into the Nordea Credit Agreement to partially finance the construction of the Q5000 and other future capital projects. The Nordea Term Loan will be funded at or near the time of the delivery of the Q5000 (Note 6). At December 31, 2014, our total investment in the Q5000 was $342.4 million, including $289.4 million of scheduled payments made to the shipyard.

In February 2013, we contracted to charter the Grand Canyon II and the Grand Canyon III for use in our robotics operations. The terms of the charters will be five years from the respective delivery dates, both of which are scheduled to be in the first half of 2015.

In September 2013, we executed a second contract with the same shipyard in Singapore that is currently constructing the Q5000. This contract provides for the construction of a newbuild semi-submersible well intervention vessel, the Q7000, which will be built to North Sea standards. This $346.0 million shipyard contract represents the majority of the expected costs associated with the construction of the Q7000. Pursuant to the terms of this contract, 20% of the contract price was paid upon the signing of the contract and the remaining 80% will be paid upon the delivery of the vessel, which is expected to occur in 2016. At December 31, 2014, our total investment in the Q7000 was $91.8 million, including the $69.2 million paid to the shipyard upon signing the contract.

In February 2014, we entered into agreements with Petróleo Brasileiro S.A. (“Petrobras”) to provide well intervention services offshore Brazil. The initial term of the agreements with Petrobras is for four years with options to extend. In connection with the Petrobras agreements, we entered into charter agreements with Siem Offshore AS for two newbuild monohull vessels, both of which are expected to be in service for Petrobras in 2016. At December 31, 2014, our total investment in the topside equipment for the two vessels was $52.0 million. In addition, we paid a charter fee deposit of $12.5 million in November 2014.

Lease Commitments

We lease facilities and charter vessels under non-cancelable operating leases and vessel charters expiring at various dates through 2025. Future minimum rentals at December 31, 2014 are as follows (in thousands):


				Facilities
		Vessels		and Other		Total

2015	$	134,964	$	5,019	$	139,983
2016		159,334		4,570		163,904
2017		160,433		4,391		164,824
2018		126,890		4,418		131,308
2019		122,004		4,478		126,482
Thereafter		282,879		20,714		303,593
Total lease commitments	$	986,504	$	43,590	$	1,030,094

For the years ended December 31, 2014, 2013 and 2012, total rental expense was approximately $147.2 million, $102.1 million and $85.0 million, respectively.

We sublease some of our facilities under non-cancelable sublease agreements. For the years ended December 31, 2014 and 2013, total rental income was $0.8 million and $0.4 million, respectively. As of December 31, 2014, the minimum rentals to be received in the future totaled $2.0 million.

Contingencies and Claims

We believe that there are currently no contingencies which would have a material effect on our financial position, results of operations or cash flows.

Litigation

We are involved in various legal proceedings, primarily involving claims for personal injury under the General Maritime Laws of the United States and the Jones Act based on alleged negligence. In addition, from time to time we incur other claims, such as contract disputes, in the normal course of business.