Commitments and Contingencies

3 Months Ended

Mar. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 7. Commitments and Contingencies

We are involved in various lawsuits, claims and other 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, 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.  We are also subject to audits for sales and use taxes and severance taxes in the various states in which we operate, and from time to time receive assessments for potential taxes that we may owe.

Delhi Field Release

In June 2013, a release of well fluids, consisting of a mixture of carbon dioxide, saltwater, natural gas and oil, was discovered and reported within an area of the Denbury-operated Delhi Field located in northern Louisiana. We completed our remediation efforts during the fourth quarter of 2013; however, we continue to monitor the area to ensure the remediation efforts were successful. We have incurred $97.3 million of the total cost estimate of $114 million which was expensed in Lease Operating Expense in 2013. Due to the possibility of new claims being asserted in the future in connection with the release, as well as variability in the estimated cost to continue to monitor the area to ensure the remediation efforts were successful, we cannot reliably estimate at this time the full extent of the costs that may ultimately be incurred by the Company related to this release. Although the Company maintains insurance policies that we believe cover certain of the costs, damages and claims related to the release, and we currently and preliminarily estimate that one-third to two-thirds of our current cost estimate of $114 million may be recoverable under such insurance policies, we have not reached any agreement with our insurance carriers as to recoverable amounts, and accordingly have not recognized any insurance recoveries in our financial statements to date. Any future insurance recoveries will be recognized in our financial statements during the period received or at the time receipt is determined to be virtually certain.