Quarterly report pursuant to Section 13 or 15(d)

Other

v3.2.0.727
Other
6 Months Ended
Jun. 30, 2015
Other [Abstract]  
Other

Note 9 – Other

 

Operating leases

 

As of June 30, 2015, the Company had contracts for two horizontal drilling rigs (the “Cactus 1 Rig” and “Cactus 2 Rig”). The Cactus 1 Rig was initially contracted for a term of two years in April 2012. The Cactus 2 Rig was initially contracted for a term of two years in April 2014. The Cactus 2 Rig replaced a previously contracted horizontal drilling rig, which was cancelled 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 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 a 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 ending November 2015, 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 operations for the three and six months ended June 30, 2015. As of June 30, 2015, the Company had paid $1,392 of the estimated $3,641 in reduced rental payments.