6. 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 operating leases at December 31, 2014 are as follows.


(Thousands of dollars)	Operating Leases
2015	$	651
2016		546
2017		46

Total minimum payments	$	1,243

Rent expense for office space for the years ended December 31, 2014 and 2013 was $785,000 and $699,000, respectively.

Asset Retirement Obligation:

A reconciliation of the liability for plugging and abandonment costs for the years ended December 31, 2014 and 2013 is as follows:


	Year Ended December 31,
(Thousands of dollars)	2014			2013
Asset retirement obligation at beginning of period	$	10,537		$	9,012
Liabilities incurred		1,627			338
(Gain) loss on settlement of obligations		(1,797	)		40
Liabilities settled		(1,074	)		(776	)
Accretion expense		370			394
Revisions in estimated liabilities		2,838			1,529

Asset retirement obligation at end of period	$	12,501		$	10,537

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 2014, the Company recognized a gain on the settlement of asset retirement obligations associated with insurance recoveries related to obligations previously recognized on the plugging and abandonment of a well. During 2014 and 2013 revisions in estimated liabilities for asset retirement obligations resulted from increased field costs resulting in shorter productive life of marginal wells and the enactment of new federal regulation requirements for plugging and abandonment.