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, 2017 are as follows.


(Thousands of dollars)	Operating Leases
2018	$	486
2019		172

Total minimum payments	$	658

Rent expense for office space for the years ended December 31, 2017 and 2016 was $659,000 and $892,000, respectively.

Asset Retirement Obligation:

A reconciliation of the liability for plugging and abandonment costs for the years ended December 31, 2017 and 2016 is as follows:


	Year Ended December 31,
(Thousands of dollars)	2017			2016
Asset retirement obligation at beginning of period	$	17,505		$	11,737
Liabilities incurred		45			68
Liabilities settled		(676	)		(288	)
Accretion expense		768			498
Revisions in estimated liabilities		5,936			5,490

Asset retirement obligation at end of period	$	23,578		$	17,505

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 2017 revisions in estimated liabilities for asset retirement obligations resulted from increased field costs resulting in shorter productive life of marginal wells and the Company’s acceleration of the schedule for plugging various marginal non-core properties.