Commitments and Contingencies

Included below is a discussion of various future commitments of the Company as of December 31, 2014. The commitments under these arrangements are not recorded in the accompanying Consolidated Balance Sheet. The amounts disclosed represent undiscounted cash flows on a gross basis, and no inflation elements have been applied.

Lease obligations. The Company has operating leases for office space and other property and equipment. The Company incurred rental expense of $2.0 million, $1.6 million and $1.5 million for the years ended December 31, 2014, 2013 and 2012, respectively.

Future minimum annual rental commitments under non-cancelable leases at December 31, 2014 are as follows:



	(In thousands)
2015	$	9,628
2016	6,384
2017	4,621
2018	4,941
2019	4,997
Thereafter	3,743
	$	34,314

Drilling contracts. As of December 31, 2014, the Company had certain drilling rig contracts with initial terms greater than one year. In the event of early contract termination under these contracts, the Company would be committed to pay approximately $15.0 million as of December 31, 2014 for the days remaining through the end of the primary terms of the contracts and early termination fees.

Volume commitment agreements. As of December 31, 2014, the Company had certain agreements with an aggregate requirement to deliver a minimum quantity of 31.7 MMBbl and 7.9 Bcf from its Williston Basin project areas within specified timeframes, all of which are less than ten years. Future commitments under these agreements are $194.0 million as of December 31, 2014.

Purchase agreements. As of December 31, 2014, the Company had certain agreements for the purchase of well completion services equipment and fresh water with an aggregate future commitment of approximately $20.0 million.

Cost sharing agreements. As of December 31, 2014, the Company had certain agreements to share the cost to construct and install electrical facilities. The Company’s estimated future commitment under these agreements was $9.0 million as of December 31, 2014.

Capital spending commitment. As of December 31, 2014, the Company had a remaining capital spending commitment of $4.8 million in connection with drilling and completion activities that the Company agreed to fund for certain wells that were part of the Company’s East Nesson Acquisitions during the third quarter of 2013. The Company will be obligated to pay the remaining committed amount to the seller if the total capital spending commitment for drilling and completion activities is not fulfilled by July 1, 2015.

Litigation. The Company is party to various legal and/or regulatory proceedings from time to time arising in the ordinary course of business. While the ultimate outcome and impact to the Company cannot be predicted with certainty, the Company believes that all such matters are without merit and involve amounts which, if resolved unfavorably, either individually or in the aggregate, will not have a material adverse effect on its financial condition, results of operations or cash flows. When the Company determines that a loss is probable of occurring and is reasonably estimable, the Company accrues an undiscounted liability for such contingencies based on its best estimate using information available at the time. The Company discloses contingencies where an adverse outcome may be material, or in the judgment of management, the matter should otherwise be disclosed.

On July 6, 2013, a freight train operated by Montreal, Maine and Atlantic Railway (“MMA”) carrying crude oil (the “Train”) derailed in Lac-Mégantic, Quebec. In March 2014, Oasis Petroleum Inc. and OP LLC were added to a group of over fifty named defendants, including other crude oil producers as well as the Canadian Pacific Railway, MMA and certain of its affiliates, owners and transloaders of the crude oil carried by the Train, several lessors of tank cars, and the Attorney General of Canada, in a motion filed in Quebec Superior Court to authorize a class-action lawsuit seeking economic, compensatory and punitive damages, as well as costs for claims arising out of the derailment of the Train (Yannick Gagne, etc., et al. v. Rail World, Inc., etc., et al., Case No. 48006000001132). The motion generally alleges wrongful death and negligence in the failure to provide for the proper and safe transportation of crude oil.

The Company believes that all claims against Oasis Petroleum Inc. and OP LLC in connection with the derailment of the Train in Lac-Mégantic, Quebec are without merit and intends to vigorously defend against them.