5. 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, 2016 are as follows.


(Thousands of dollars)	Operating Leases
2017	$	597
2018		59

Total minimum payments	$	656

Rent expense for office space for the years ended December 31, 2016 and 2015 was $892,000 and $786,000, respectively.

Asset Retirement Obligation:

A reconciliation of the liability for plugging and abandonment costs for the years ended December 31, 2016 and 2015 is as follows:


	Year Ended December 31,
(Thousands of dollars)	2016			2015
Asset retirement obligation at beginning of period	$	11,737		$	12,501
Liabilities incurred		68			28
Liabilities settled		(288	)		(1,112	)
Accretion expense		498			517
Revisions in estimated liabilities		5,490			(197	)

Asset retirement obligation at end of period	$	17,505		$	11,737

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. During 2016 revisions in estimated liabilities for asset retirement obligations resulted from substantially lower commodity prices and increased field costs resulting in shorter productive life of marginal wells.