Commitments |
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| Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments |
COMMITMENTS
Plugging and Abandonment Funds
In connection with the Company's acquisition in 1997 of the remaining 50% interest in its WCBB properties, the Company assumed the seller’s (Chevron) obligation to contribute approximately $18,000 per month through March 2004 to a plugging and abandonment trust and the obligation to plug a minimum of 20 wells per year for 20 years commencing March 11, 1997. Beginning in 2009, the Company could access the trust for use in plugging and abandonment charges associated with the property, although it has not yet done so. As of December 31, 2018, the plugging and abandonment trust totaled approximately $3.1 million. At December 31, 2018, the Company had plugged 555 wells at WCBB since it began its plugging program in 1997, which management believes fulfills its current minimum plugging obligation.
Contributions to 401(k) Plan
Gulfport sponsors a 401(k) and Profit Sharing plan under which eligible employees may contribute up to 100% of their total compensation up to the maximum pre-tax threshold through salary deferrals. Also under the plan, the Company will make a bi-weekly contribution on behalf of each employee equal to at least 3% of his or her salary, regardless of the employee’s participation in salary deferrals and may also make additional discretionary contributions. During the years ended December 31, 2018, 2017 and 2016, Gulfport incurred $2.6 million, $3.0 million, and $1.7 million, respectively, in contributions expense related to this plan.
Employment and Separation Agreements
The Company was party to an employment agreement with Michael G. Moore, its former Chief Executive Officer and President, which provided for a minimum salary level, subject to review and potential increases by the Compensation Committee and/or the Board of Directors, as well as participation in the Company's incentive plans and other employee benefits. Effective October 29, 2018, Mr. Moore stepped down from his position as the Chief Executive Officer and President of the Company and as a member of its board of directors. In connection with Mr. Moore's departure, the Company entered into a separation and release agreement with Mr. Moore, effective as that date. Under the terms of his separation agreement the Company paid Mr. Moore separation payments in the aggregate amount of $400,000 in December 2018. Also, the Company agreed to reimburse Mr. Moore's portion of COBRA premiums for a maximum of six months, which reimbursement will cease at any time he becomes eligible for group medical coverage from another employer. The separation agreement also includes a release of claims by Mr. Moore against the Company, its directors, stockholders, employees, agents, attorneys, consultants and affiliates.
The Company has also entered into employment agreements with certain members of management that provide for one-year terms commencing as of January 1, 2017 (the “Initial Period”), which automatically extend for successive one-year periods unless the Company or the executive elects to not extend the term by giving written notice to the other party at least 30 days' prior to the end of the Initial Period or any anniversary thereof. The agreements provide for, among other things, compensation, benefits and severance payments. The employment agreements also contains certain termination and change of control provisions.
Firm Transportation and Sales Commitments
The Company had approximately 2,300,000 MMBtu per day of firm sales contracted with third parties. The table below presents these commitments at December 31, 2018 as follows:
The Company also had approximately $3.5 billion of firm transportation contracted with third parties. The table below presents these commitments at December 31, 2018 as follows:
Operating Leases
The Company leases office facilities under non-cancellable operating leases exceeding one year. Future minimum lease commitments under these leases at December 31, 2018 are as follows:
Presented below is rent expense for the years ended December 31, 2018, 2017 and 2016, respectively.
Other Commitments
Effective October 1, 2014, the Company entered into a Sand Supply Agreement with Muskie Proppant LLC (“Muskie”), a subsidiary of Mammoth Energy. Effective August 3, 2018, the Company extended the agreement through December 31, 2021. Pursuant to this agreement, as amended, the Company has agreed to purchase annual and monthly amounts of proppant sand subject to exceptions specified in the agreement at agreed pricing plus agreed costs and expenses. Failure by either Muskie or the Company to deliver or accept the minimum monthly amount results in damages calculated per ton based on the difference between the monthly obligation amount and the amount actually delivered or accepted, as applicable. The Company incurred $2.2 million related to non-utilization fees during the year ended December 31, 2018. The Company did not incur any non-utilization fees during the year ended 2017.
Effective October 1, 2014, the Company entered into an Amended and Restated Master Services Agreement for pressure pumping services with Stingray Pressure Pumping LLC (“Stingray Pressure”), a subsidiary of Mammoth Energy. Pursuant to this agreement, as amended effective July 1, 2018, Stingray Pressure has agreed to provide hydraulic fracturing, stimulation and related completion and rework services to the Company and the Company has agreed to pay Stingray Pressure a monthly service fee plus the associated costs of the services provided. The Company has the right to suspend services of one crew and only one crew at any point in time without payment, fee or other obligation associated with the suspended crew, given appropriate notification of suspension. See Note 15 for further discussion of amounts paid by the Company to Mammoth Energy.
As of December 31, 2018, the Company has drilling rig contracts with various terms extending to February 2021 to ensure rig availability in its key operating areas. A portion of these future costs will be borne by other interest owners.
Future minimum commitments under these agreements at December 31, 2018 are as follows:
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