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Commitments and Contingencies
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6 Months Ended |
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Jun. 30, 2011
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| Commitments and Contingencies [Abstract] | |
| Commitments and Contingencies |
5. Commitments and Contingencies
Approach Operating, LLC v. EnCana Oil & Gas (USA) Inc., Cause No. 29.070A, District Court of
Limestone County, Texas. On July 2, 2009, our operating subsidiary filed a lawsuit against EnCana
Oil & Gas (USA) Inc. (“EnCana”) for breach of the joint operating agreement (“JOA”) covering our
North Bald Prairie project in East Texas and seeking damages for nonpayment of amounts owed under
the JOA as well as declaratory relief. We contend that such amounts owed by EnCana are at least $2
million, plus attorneys’ fees, costs and other amounts to which we might be entitled under law or
in equity. The amount owed to us is included in other non-current assets on our balance sheet at
June 30, 2011, and December 31, 2010. As we previously have disclosed, in December 2008, EnCana
notified us that it was exercising its right to become operator of record for joint interest wells
in North Bald Prairie under an operator election agreement between the parties. EnCana contends
that it does not owe us for part or all of joint interest billings incurred after EnCana provided
us with notice of EnCana’s election to assume operatorship in December 2008. EnCana also contends
that certain of the disputed operations were unnecessary, while other charges are improper because
we failed to obtain EnCana’s consent under the JOA prior to undertaking the operations.
We have entered into an 18-month contract for a dedicated, third-party fracture stimulation
fleet, effective September 1, 2011. The contract requires a minimum commitment of $3 million per
month for the contract term. The contract contains customary, early termination provisions for a
monthly fee of less than the minimum monthly commitment in the event of a termination before the
end of the contract term.
We also are involved in various other legal and regulatory proceedings arising in the normal
course of business. While we cannot predict the outcome of these proceedings with certainty, we do
not believe that an adverse result in any pending legal or regulatory proceeding, individually or
in the
aggregate, would be material to our
consolidated financial condition or cash flows; however,
an unfavorable outcome could have a material adverse effect on our results of operations for a
specific interim period or year.
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