COMSTOCK RESOURCES INC Commitments Disclosure
(5) Commitments and Contingencies
Commitments
The Company rents office space and other facilities under noncancelable operating leases. Rent expense for the years ended December 31, 2015, 2016 and 2017 was $1.5 million, $1.5 million and $1.6 million, respectively. Minimum future payments under the leases at December 31, 2017 are as follows:
|
|
|
(In thousands) |
|
|
|
2018 |
|
$ |
1,560 |
|
|
2019 |
|
|
1,560 |
|
|
2020 |
|
|
1,560 |
|
|
2021 |
|
|
1,560 |
|
|
2022 |
|
|
— |
|
|
|
|
$ |
6,240 |
|
The Company has entered into natural gas transportation and treating agreements through July 2019. Maximum commitments under these transportation agreements as of December 31, 2017 totaled $2.4 million. As of December 31, 2017, the Company had contracted for contract drilling services through June 2018 of $7.4 million.
Contingencies
From time to time, the Company is involved in certain litigation that arises in the normal course of its operations. The Company records a loss contingency for these matters when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company does not believe the resolution of these matters will have a material effect on the Company's financial position, results of operations or cash flows and no material amounts are accrued relative to these matters at December 31, 2016 or 2017.
About Commitments Disclosures
Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.
Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.