Note 12. 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 14 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	2018		2017		2016
Operating lease payments	$	25,448	$	25,075	$	22,744
Sublease rental receipts	2,224		4,275		3,074

The following tables summarize by year the remaining non-cancelable future payments under our leases as of December 31, 2018:



In thousands	Pipeline and Capital Leases
2019	$	32,369
2020	28,502
2021	26,361
2022	27,871
2023	27,899
Thereafter	113,439
Total minimum lease payments	256,441
Less: Amount representing interest	(71,006		)
Present value of minimum lease payments	$	185,435



In thousands	Operating Leases
2019	$	10,690
2020	9,776
2021	10,007
2022	10,223
2023	10,262
Thereafter	18,169
Total minimum lease payments	$	69,127

In addition, we expect to receive approximately $8.1 million for 2019 through 2021 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 9 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 $14 million to $33 million per year, assuming a $60 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 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 853 Bcf of CO₂ to these customers over the next 16 years. The maximum volume required in any given year is approximately 254 MMcf/d, which we judge to be minor given the size of our Jackson Dome proved CO₂ reserves at December 31, 2018, 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. We 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, the Company assumed a 20-year helium supply contract under which we agreed to supply the helium separated from the full well stream by operation of the gas processing facility to a third-party purchaser, APMTG Helium, LLC (“APMTG”). The helium supply contract provides for the delivery of a minimum contracted quantity of helium with liquidated damages payable if specified quantities of helium are not supplied in accordance with the terms of the contract. The liquidated damages are specified in the contract at up to $8.0 million per contract year and are capped at an aggregate of $46.0 million over the term of the contract.

As the gas processing facility has been shut-in since mid-2014 due to significant technical issues, we have not been able to supply helium under the helium supply contract. In a case filed in November 2014 in the Ninth Judicial District Court of Sublette County, Wyoming, APMTG claimed multiple years of liquidated damages for non-delivery of volumes of helium specified under the helium supply contract. The Company’s position is that our contractual obligations are excused by virtue of events that fall within the force majeure provisions in the helium supply contract.

On January 21, 2019, the Company received notice of the trial court’s ruling that a force majeure condition did exist, but the Company’s performance was only excused by the force majeure provisions of the contract for a 35-day period in 2014, and as a result the Company should pay APMTG liquidated damages and interest thereon for those time periods from contract commencement to the close of evidence (November 29, 2017) when the Company’s performance was not excused as provided in the contract. The trial court has not yet entered a final judgment based upon its decision. The Company currently estimates the contractual liquidated damages to be $31.8 million, representing the amount due for the contract years for which evidence was submitted at the trial ending November 29, 2017. However, absent reversal of the trial court’s factual or legal conclusions on appeal, the Company anticipates total liquidated damages will equal the $46.0 million aggregate cap under the helium supply contract (which includes an additional $14.2 million of liquidated damages for the contract years ending July 31, 2018 and July 31, 2019) and other costs associated with the settlement of approximately $3.4 million, the total of which the Company has included in “Other liabilities” in our Consolidated Balance Sheets as of December 31, 2018 and “Other expenses” in our Consolidated Statements of Operations for the year ended December 31, 2018. The Company’s position continues to be that its contractual obligations have been and continue to be excused by events that fall within the force majeure provisions in the helium supply contract. The Company intends to continue to vigorously defend its position and pursue all of its rights, which may include an appeal of the trial court’s ruling, the results of which cannot be currently predicted.

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.

The Penn Virginia Merger Agreement contains certain termination rights for both Denbury and Penn Virginia, including, among others, if the Merger is not completed by April 30, 2019. In the event of a termination of the Merger Agreement under certain circumstances, Penn Virginia may be required to pay Denbury a termination fee of $45 million, or Denbury may be required to pay Penn Virginia a termination fee of $45 million, in each case depending on the circumstances of the termination.

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.