Commitments and Contingencies

12 Months Ended

Dec. 31, 2016

16. Commitments and Contingencies

From time to time, the Company is a party to various legal proceedings arising in the ordinary course of business. Although the Company cannot predict the outcomes of any such legal proceedings, management believes that the resolution of pending legal actions will not have a material adverse effect on the Company’s financial condition, results of operations or liquidity, as the Company believes it is adequately indemnified and insured.

The Company experiences contractual disputes with its clients from time to time regarding the payment of invoices or other matters. While the Company seeks to minimize these disputes and maintain good relations with its clients, the Company has experienced in the past, and may experience in the future, disputes that could affect its revenues and results of operations in any period.

The Company has non-cancelable operating leases for office and shop space in Midland, Plano, Denison, Houston, Denver, Oklahoma City and Calgary, Alberta.

The following table summarizes payments due in specific periods related to the Company’s contractual obligations with initial terms exceeding one year as of December 31, 2016.


	Payments Due by Period (in thousands)
			Within						After
	Total		1 Year		2-3 Years		4-5 Years		5 Years
Operating lease obligations (office space)	$	9,567	$	1,468	$	2,256	$	1,591	$	4,252

Some of the Company’s operating leases contain predetermined fixed increases of the minimum rental rate during the initial lease term. For these leases, the Company recognizes the related expense on a straight-line basis and records deferred rent as the difference between the amount charged to expense and the rent paid. Rental expense under the Company’s operating leases with initial terms exceeding one year was $1,907,000 for the year ended December 31, 2016, $1,691,000 for the year ended December 31, 2015, $242,000 for the three months ended December 31, 2014 and $965,000 for the year ended September 30, 2014.

As of December 31, 2016, the Company had unused letters of credit of $1,767,000 associated with the Company's existing insurance coverage.

Also as of December 31, 2016, the Company had unused letters of credit of $233,000 associated with the Company’s self-insured retention on workers’ compensation claims outstanding prior to October 1, 2011. Effective in fiscal 2012, the Company was no longer self-insured for workers’ compensation claims after October 1, 2011.