Quarterly report pursuant to Section 13 or 15(d)

Other

v2.4.1.9
Other
3 Months Ended
Mar. 31, 2015
Other [Abstract]  
Other

Note 9 – Other

 

Operating leases

 

As of March 31, 2015, the Company had contracts for two horizontal drilling rigs (the “Cactus 1 Rig” and “Cactus 2 Rig”) and one vertical rig. The horizontal rigs were initially contracted for a term of two years in April 2012, the terms of which were subsequently renewed in March 2014. In March 2015, the Company extended the terms of its Cactus 1 Rig and Cactus 2 Rig to end in July 2018 and August 2018, respectively. The vertical drilling rig was initially contracted for a term of one year with an expiration of November 2015 to be used as part of our horizontal drilling program, drilling the vertical section of horizontal wells. The rig lease agreements include early termination provisions that obligate the Company to reduced minimum rentals pursuant to a “standby” dayrate for the term of the agreement. These payments would be reduced assuming the lessor is able to re-charter the rig and staffing personnel to another lessee. In March 2015, the Company decided to terminate its one-year contract for the vertical rig effective April 2015 and will be required to pay approximately $3,641 in reduced rental payments over the remainder of the lease term unless the lessor is able to re-charter the rig to another lessee. This amount was recognized as rig termination fee on the Consolidated Statements of Income for the three months ended March 31, 2015.