Annual report pursuant to Section 13 and 15(d)


12 Months Ended
Dec. 31, 2012

16. Commitments

We have operating lease agreements for office space and office equipment. The lease for the majority of our office space terminates in December 2022. Minimum future lease payments due under noncancelable operating leases with terms in excess of one year as of December 31, 2012 are as follows (in millions): 2013 – $1.2; 2014 – $1.3; 2015 – $1.3; thereafter – $9.3.

Total rent expense was approximately $1.7 million, $1.9 million and $2.0 million during 2012, 2011 and 2010, respectively.

Pursuant to the Purchase and Sale Agreement with Total E&P, we are required to fulfill security requirements related to ARO for certain properties through bonds or making payments to an escrow account or a combination. As of December 31, 2012, we were in compliance with the security amount requirement of $46.0 million. Additional security requirements are $9.0 million in 2013, $9.0 million in 2014, $9.0 million in 2015, $6.0 million in 2016 and $24.0 million in the 2017 to 2023 time period to a total security requirement of $103.0 million by 2023.

Pursuant to the Purchase and Sale agreement with Shell related to ARO for certain properties, we have bonds that are subject to re-appraisal in the 2015. The current security requirement of $74.0 million could be increased up to $94.0 million depending on certain conditions and circumstances.

We have no drilling rig commitments with a term that exceeded one year as of December 31, 2012 and our drilling rig commitments meet the criteria of an operating lease. Future payments of all drilling rig commitments as of December 31, 2012 were $36.5 million in 2013 and none beyond 2013.