NOTE 15 — COMMITMENTS AND CONTINGENCIES:

Leases

We lease office facilities in Lafayette and New Orleans, Louisiana, Houston, Texas and Morgantown, West Virginia under the terms of long-term, non-cancelable leases expiring on various dates through 2018. We also lease certain equipment on our oil and gas properties typically on a month-to-month basis. The minimum net annual commitments under all leases, subleases and contracts with non-cancelable terms in excess of 12 months at December 31, 2013 were as follows:


2014	$	736
2015		637
2016		358
2017		301
2018		147

Payments related to our lease obligations for the years ended December 31, 2013, 2012 and 2011 were approximately $597, $894 and $446, respectively.

Other Commitments

We are contingently liable to surety insurance companies in the amount of $81,878 relative to bonds issued on our behalf to the Bureau of Ocean Energy Management (the “BOEM”), federal and state agencies and certain third parties from which we purchased oil and gas working interests. The bonds represent guarantees by the surety insurance companies that we will operate in accordance with applicable rules and regulations and perform certain plugging and abandonment obligations as specified by applicable working interest purchase and sale agreements.

In connection with our exploration and development efforts, we are contractually committed to the use of drilling rigs and the acquisition of seismic data in the aggregate amount of $216,726 to be incurred over the next four years. We have placed $22,350 on deposit to guarantee these obligations.

The Oil Pollution Act (the “OPA”) imposes ongoing requirements on a responsible party, including the preparation of oil spill response plans and proof of financial responsibility to cover environmental cleanup and restoration costs that could be incurred in connection with an oil spill. Under the OPA and a final rule adopted by the BOEM in August 1998, responsible parties of covered offshore facilities that have a worst case oil spill of more than 1,000 barrels must demonstrate financial responsibility in amounts ranging from at least $10,000 in specified state waters to at least $35,000 in Outer Continental Shelf (the “OCS”) waters, with higher amounts of up to $150,000 in certain limited circumstances where the BOEM believes such a level is justified by the risks posed by the operations, or if the worst case oil-spill discharge volume possible at the facility may exceed the applicable threshold volumes specified under the BOEM’s final rule. We do not anticipate that we will experience any difficulty in continuing to satisfy the BOEM’s requirements for demonstrating financial responsibility under the OPA and the BOEM’s regulations.

Litigation

We are named as a defendant in certain lawsuits and are a party to certain regulatory proceedings arising in the ordinary course of business. We do not expect that these matters, individually or in the aggregate, will have a material adverse effect on our financial condition.

Since 2003, we have been involved in disputes with the Louisiana Department of Revenue (the “LDR”), which resulted in several petitions being filed by the LDR in Louisiana state court, claiming additional franchise taxes due. In addition, we received preliminary assessments from the LDR of additional franchise and income taxes resulting from audits of Stone and its subsidiaries. These petitions and assessments primarily related to the LDR’s assertion that sales of crude oil and natural gas from properties located on the OCS that are transported through the state should be sourced to the state for purposes of computing the Louisiana franchise tax and income tax apportionment ratios. By agreement dated November 22, 2013, Stone executed a settlement with the state in the amount of $13,000, resolving all claims asserted in litigation, as well as assessments proposed by the LDR for franchise and income taxes alleged to be due by Stone for the tax years 1999 through 2009, including claims for interest thereon. The agreement was reached under an amnesty program pursuant to Act 421 of the 2013 Regular Session of the Louisiana Legislature. The settlement amount, less income tax and interest amounts previously accrued, has been recorded as an expense in the accompanying consolidated statement of income. The tax years 2011 through 2013 remain subject to examination but the exposure to additional assessments is immaterial.