Commitments

12 Months Ended

Dec. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

5. Commitments

Operating Leases:

In February 2019 the Company amended certain lease for office space in Houston providing for payments of $344 thousand and $86 thousand in 2019 and 2020, respectively.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, 2018 are as follows.

(Thousands of dollars)	Operating Leases
2019	$	222
2020		69
2021		17
Total minimum payments	$	308

In February 2019 the Company amended certain leases for office space in Houston providing for payments of $344 thousand and $86 thousand in 2019 and 2020, respectively.

Rent expense for office space for the years ended December 31, 2018 and 2017 was $659,000 and $659,000, respectively.

Asset Retirement Obligation:

A reconciliation of the liability for plugging and abandonment costs for the years ended December 31, 2018 and 2017 is as follows:


	Year Ended December 31,
(Thousands of dollars)	2018			2017
Asset retirement obligation at beginning of period	$	23,578		$	17,505
Liabilities incurred		49			45
Liabilities settled		(2,656	)		(676	)
Accretion expense		1,120			768
Revisions in estimated liabilities		(757	)		5,936
Asset retirement obligation at end of period	$	21,334		$	23,578

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.