Note 10. Commitments and Contingencies

Leases

We lease office space, equipment and vehicles that have non-cancelable lease terms. Currently, our outstanding leases have terms up to 9 years. We have subleased part of the office space included in our operating leases for which we received rental payments. The following table summarizes operating lease payments paid and sublease rentals received during the periods indicated:



	Year Ended December 31,
In thousands	2016		2015		2014
Operating lease payments	$	22,744	$	29,403	$	43,333
Sublease rental receipts	3,074		3,698		2,347

The following tables summarize by year the remaining non-cancelable future payments under our leases as of December 31, 2016:



In thousands	Pipeline and Capital Leases
2017	$	48,579
2018	48,139
2019	40,215
2020	27,872
2021	26,092
Thereafter	165,170
Total minimum lease payments	356,067
Less: Amount representing interest	(104,678		)
Present value of minimum lease payments	$	251,389



In thousands	Operating Leases
2017	$	10,965
2018	11,154
2019	10,574
2020	9,734
2021	9,996
Thereafter	38,549
Total minimum lease payments	$	90,972

In addition, we expect to receive approximately $7.8 million for 2017 through 2019 under our sublease agreements.

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 16 years. The price we will pay for CO₂ generally varies depending on the amount of CO₂ delivered and the price of oil. Once all commitments have commenced, our annual commitment under these contracts could range from $41 million to $86 million per year, assuming a $60 per Bbl NYMEX oil price.

In the second quarter of 2016, we amended our CO₂ offtake agreement with Mississippi Power Company (“MSPC”), which amendment included increasing our offtake percentage from 70% to 100% of CO₂ quantities produced and lowering the base price related to the cost of CO₂, deliveries of which are currently expected to begin during the first half of 2017. Based on the amended terms in the agreement, we concluded for accounting purposes that the agreement contains an embedded lease related to the pipeline owned by MSPC used to transport CO₂ to Denbury. We currently plan to record a capital lease on the balance sheet of approximately $110 million upon lease commencement.

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 one CO₂ volumetric production payment (“VPP”). Based upon the maximum amounts deliverable as stated in the industrial contracts and the VPP, we estimate that we may be obligated to deliver up to 383 Bcf of CO₂ to these customers over the next 12 years. The maximum volume required in any given year is approximately 111 MMcf/d, which we judge to be minor given the size of our Jackson Dome proved CO₂ reserves at December 31, 2016, our current production capabilities and our projected levels of CO₂ usage for our own tertiary flooding program.

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, results of operations or cash flows, litigation is subject to inherent uncertainties. Although a single or multiple adverse rulings or settlements could possibly have a material adverse effect on our finances, we only accrue for losses from litigation and claims if we determine that a loss is probable and the amount can be reasonably estimated.

Riley Ridge Helium Supply Contract Claim

As part of our 2010 and 2011 acquisitions of the Riley Ridge Unit and associated gas processing facility that was under construction, we assumed a 20-year helium supply contract under which we agreed to supply to a third-party purchaser the helium separated from the full well stream by operation of the gas processing facility. The helium supply contract provides for the delivery of a minimum contracted quantity of helium, subject to adjustment after startup of the Riley Ridge gas processing facility, with liquidated damages payable if specified quantities of helium are not supplied in accordance with the terms of the contract. The liquidated damages are capped at $8.0 million per contract year and are capped at an aggregate of $46.0 million over the remaining term of the contract. As the gas processing facility has been shut-in since mid-2014, we have not been able to supply helium to the third-party purchaser under the helium supply contract. In a case originally filed in November 2014 by APMTG Helium, LLC, the third-party helium purchaser, after a week of trial on the third-party purchaser’s claim for multiple years of liquidated damages for non-delivery of volumes of helium specified under the helium supply contract, and on our claim that the contractual obligation is excused by virtue of events that fall within the force majeure provisions in the helium supply contract, the trial was stayed in late February 2017 until a later date yet to be determined by the District Court. The Company plans to continue to vigorously defend its position, but we are unable to predict at this time the outcome of this dispute.

Settlement of NGS Sub Corp., Evolution, et al v. Denbury Onshore, LLC

During the second quarter of 2016, we settled litigation pending since 2013 related to interpretation of the terms of the contracts under which we purchased our interest in the Delhi Field from an affiliate of the entity which continues to own an interest in the field, and claims related to the ongoing financial and operating impact of the June 2013 release of well fluids in that field and our remediation of that release. In the settlement, we paid the co-owner $27.5 million, exchanged various interests in the field, and agreed upon ongoing field operations and related transportation charges. The cash payment was recorded to “Other expenses” in our Consolidated Statements of Operations in the second quarter of 2016.

Other Contingencies

We are subject to audits for various taxes (income, sales and use, and severance) in the various states in which we operate, 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 age