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, 2015 are as follows.


(Thousands of dollars)	Operating Leases
2016	$	793
2017		125
2018		16

Total minimum payments	$	934

Rent expense for office space for the years ended December 31, 2015 and 2014 was $786,000 and $785,000, respectively.

Asset Retirement Obligation:

A reconciliation of the liability for plugging and abandonment costs for the years ended December 31, 2015 and 2014 is as follows:


	Year Ended December 31,
(Thousands of dollars)	2015			2014
Asset retirement obligation at beginning of period	$	12,501		$	10,537
Liabilities incurred		28			1,627
(Gain) loss on settlement of obligations		—			(1,797	)
Liabilities settled		(1,112	)		(1,074	)
Accretion expense		517			370
Revisions in estimated liabilities		(197	)		2,838

Asset retirement obligation at end of period	$	11,737		$	12,501

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 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.