Commitments And Contingencies

12 Months Ended

Dec. 31, 2012

Disclosure Text Block Supplement [Abstract]

Commitments and Contingencies

Note 11. Commitments and Contingencies

Leases

We lease office space, equipment and vehicles that have non-cancelable lease terms.  Leases entered into during 2012 have terms up to thirteen years.  Lease payments associated with operating leases were $33.6 million, $52.3 million and $42.4 million in 2012, 2011 and 2010, respectively.  We have subleased part of the office space included in our operating leases for which we received approximately $2.7 million, $2.4 million and $0.5 million in 2012, 2011 and 2010, respectively.  In addition, we expect to receive approximately $3.6 million for 2013 through 2016 under these sublease agreements.

The following table summarizes by year the remaining non-cancelable future payments under these leases as of December 31, 2012:

In thousands	Pipeline Financing Leases			Capital Leases			Operating Leases
2013	$	30,817		$	35,429		$	10,656
2014	31,992			31,629			11,452
2015	32,591			30,139			12,300
2016	31,233			28,038			12,384
2017	30,678			22,052			12,720
Thereafter	296,226			31,806			80,562
Total minimum lease payments	453,537			179,093			$	140,074
Less: Amount representing interest	(217,293		)	(20,833		)
Present value of minimum lease payments	$	236,244		$	158,260

Commitments

We have entered into long-term commitments to purchase CO₂ that are either non-cancelable or cancelable only upon the occurrence of specified future events.   The commitments continue for up to 20 years.  The price we will pay for CO₂ varies depending on the amount of CO₂ delivered and the price of oil.  We anticipate the contracts will provide us with approximately 335 MMcf/d to 675 MMcf/d of CO₂ at a cost of approximately $95 million to $190 million per year, assuming a $100 per Bbl NYMEX oil price.

We are party to long-term contracts that require us to deliver CO₂ to our industrial CO₂ customers at various contracted prices, plus we have a CO₂ delivery obligation to Genesis related to three CO₂ volumetric production payments (“VPPs”). Based upon the maximum amounts deliverable as stated in the industrial contracts and the VPPs, we estimate that we may be obligated to deliver up to 327 Bcf of CO₂ to these customers over the next 14 years. The maximum volume required in any given year is approximately 109 MMcf/d.  Given the size of our Jackson Dome proven CO₂ reserves at December 31, 2012, our current production capabilities and our projected levels of CO₂ usage for our own tertiary flooding program, we believe that we can meet these contractual delivery obligations.

In conjunction with the August 1, 2011 Riley Ridge acquisition, we assumed the 20-year helium supply contract under which the original participants in Riley Ridge agreed to supply helium to a third-party purchaser.  After the commencement date, the contract provides for the delivery of a minimum contracted quantity of helium, subject to adjustment after start-up of the Riley Ridge Plant, which if not supplied in accordance with the terms of the contract, may obligate us to compensate the third-party helium purchaser for the amount of the shortfall in an amount not to exceed $8.0 million per year.

Litigation

We are involved in various lawsuits, claims and regulatory proceedings incidental to our businesses.  While we currently believe that the ultimate outcome of these proceedings, individually and in the aggregate, will not have a material adverse effect on our financial position or overall trends in results of operations or cash flows, litigation is subject to inherent uncertainties.  If an unfavorable ruling were to occur, there exists the possibility of a material adverse impact on our net income in the period in which the ruling occurs.  We provide accruals for litigation and claims if we determine that a loss is probable and the amount can be reasonably estimated.

Other Contingencies

We are subject to audits in the various states in which we operate for sales and use taxes and severance taxes, and from time to time receive assessments for potential taxes that we may owe.  In the past, settlement of these matters has not had a material adverse financial impact on us, and currently we have no material assessments for potential taxes.

We are subject to various possible contingencies that arise primarily from interpretation of federal and state laws and regulations affecting the oil and natural gas industry.  Such contingencies include differing interpretations as to the prices at which oil and natural gas sales may be made, the prices at which royalty owners may be paid for production from their leases, environmental issues and other matters.  Although we believe that we have complied with the various laws and regulations, administrative rulings and interpretations thereof, adjustments could be required as new interpretations and regulations are issued.  In addition, production rates, marketing and environmental matters are subject to regulation by various federal and state agencies.