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Other Long-Term Obligations And Commitments
 3 Months Ended
Mar. 31, 2012
Other Long-Term Obligations And Commitments [Abstract]  
Other Long-Term Obligations And Commitments

(7) Other Long-Term Obligations and Commitments:

Operating Leases:

The Company has several non-cancelable operating leases, primarily for rental of office space, that have a term of more than one year. The future minimum lease payments for the rest of the fiscal 2012 and thereafter for the operating leases are as follows:

 

(Thousands of dollars)    Operating
Leases		  

2012

    $ 416   

2013

      434   

2014

      16   
  

 

 

  

Total minimum payments

    $ 866   
  

 

 

  

Rent expense for office space for the three months ended March 31, 2012 and 2011 was $226,000 and $182,000, respectively.

Asset Retirement Obligation:

A reconciliation of the liability for plugging and abandonment costs for the three months ended March 31, 2012 is as follows:

 

(Thousands of dollars)       

Asset retirement obligation – December 31, 2011

    $ 19,013   

Liabilities incurred

      200   

Liabilities settled

      (93 ) 

Accretion expense

      741   

Revisions in estimated liabilities

      104   
  

 

 

  

Asset retirement obligation – March 31, 2012

    $ 19,965   
  

 

 

  

The Company's liability is determined using significant assumptions, including current estimates of plugging and abandonment costs, annual inflation of these costs, the productive life of wells and a risk-adjusted interest rate. Changes in any of these assumptions can result in significant revisions to the estimated asset retirement obligation. Revisions to the asset retirement obligation are recorded with an offsetting change to producing properties, resulting in prospective changes to depreciation, depletion and amortization expense and accretion of discount. Because of the subjectivity of assumptions and the relatively long life of most of the Company's wells, the costs to ultimately retire the wells may vary significantly from previous estimates.

In December 2011, the Company entered into a fixed price contract for the plugging and abandonment of a substantial portion of its offshore properties. In connection with this contract, the Company deposited a net $6.0 million with the contractor which is reflected in prepaid obligations at March 31, 2012 and December 31, 2011. All work under this contract is expected to be completed in 2012.