Note 12 — Commitments, Contingencies and Industry Concentration
Commitments and Contingencies
Operating Leases
. Our operating leases relate primarily to obligations associated with aircraft and
office facilities. Future non-cancellable commitments related to these leases are as follows (in
thousands):
2012 $ 15,016
2013
14,232
2014
13,941
2015
13,304
2016
10,734
Thereafter
34,911
$ 102,138
Total expenses related to such leases were $12.2 million, $12.3 million and $13.0 million in 2011,
2010 and 2009, respectively.
Contractual Obligations.
As is common within the industry, we have entered into various
commitments and operating agreements associated with, among other things, oil and gas exploration,
development and production activities, gathering and transportation, drilling rig and oilfield and other
services. Aggregate future obligations under these agreements, described below, total $770.4 million,
of which approximately $226.6 million is expected to be paid in 2012, $176.9 million in 2013, $112.2
million in 2014, $39.8 million in 2015, $39.4 million in 2016 and $175.5 million thereafter.
Through our ownership in Lucius, located in the deepwater U.S. Gulf of Mexico, we joined the
Lucius and Hadrian working interest partners and executed a unit participation and unit operating
agreement effective June 1, 2011. As part of the agreements, we have agreed to share in our portion
of certain long lead equipment orders and detailed engineering work and have a commitment of
approximately $314.3 million remaining under the development plan.
Plains Offshore and its partners have entered into various agreements with third parties for long-
term oil and gas gathering and transportation services at the Lucius oil field. Beginning in 2014, Plains
Offshore will pay guaranteed fixed minimum monthly fees plus additional variable gathering fees based
upon actual throughput. The commitments of Plains Offshore under the oil gathering agreements are
guaranteed by PXP.
We have commitments for hydraulic fracturing services, coil tubing services and drilling rig
contracts with terms from one year up to three years primarily to perform our Eagle Ford Shale drilling
program.
At our Arroyo Grande field in San Luis Obispo County, California, we have committed for the
design and construction of a produced water reclamation facility. Additionally, we have signed a
ten-year operations agreement for the facility which will commence upon commercial operations.
Environmental Matters
. As an owner or lessee and operator of oil and gas properties, we are
subject to various federal, state and local laws and regulations relating to discharge of materials into,
and protection of, the environment. Often these regulations are more burdensome on older properties
that were operated before the regulations came into effect such as some of our properties in California
that have operated for over 100 years. We have established policies for continuing compliance with
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