|12 Months Ended|
Dec. 31, 2017
We have operating lease agreements for office space and office equipment. The lease for the majority of our office space terminates in December 2022. Minimum future lease payments due under noncancelable operating leases with terms in excess of one year as of December 31, 2017 are as follows: 2018–$1.8 million; 2019–$1.8 million; 2020–$1.8 million; 2021–$1.8 million thereafter–$2.0 million. Total rent expense was approximately $3.0 million, $3.2 million and $3.3 million during 2017, 2016 and 2015, respectively.
Pursuant to the Purchase and Sale Agreement with Total E&P, we may fulfill security requirements related to ARO for certain properties through securing bonds, or through making payments to an escrow account under a formula pursuant to the agreement, or a combination thereof, until certain prescribed thresholds are met. Once the threshold is met for that year, excess funds in the escrow account are returned to us. As of December 31, 2017, we had bonds related to the agreement with Total E&P totaling $81.3 million and had no amounts in escrow. The threshold is $88.0 million for 2018, $91.0 million for 2019 and escalates to $103.0 million for 2023 in $3.0 million per year increments.
Pursuant to the Purchase and Sale Agreement with Shell Offshore Inc. (“Shell”) related to ARO for certain properties, we have bonds that are subject to re-appraisal by either party. As of December 31, 2017, neither party had requested a re-appraisal to be made. The current security requirement of $64.0 million could be increased up to $94.0 million depending on certain conditions and circumstances.
During 2017, 2016 and 2015, we had surety bonds primarily related to our decommissioning obligations or ARO. Total expenses related to surety bonds, inclusive of the surety bonds in connection with the Total E&P and Shell agreements described above, were $5.7 million, $4.3 million and $5.5 million during 2017, 2016 and 2015, respectively. The amount of future commitments is dependent on rates charged in the market place and when asset retirements are completed. Estimated future expenses related to surety bonds were based on current market prices and estimates of the timing of asset retirements, of which some wells and structures are estimated to extend to 2030. Future costs are estimated as follows: 2018–$6.2 million; 2019–$6.0 million; 2020–$5.7 million; 2021–$5.3 million; thereafter–$42.4 million. Future surety bond costs may change due to a number of factors, including changes and interpretations of regulations by the BOEM regulations.
As of December 31, 2017, we had $16.9 million of collateral deposits for certain sureties related to certain surety bonds for decommissioning obligations and appeals submitted to the Interior Board of Land Appeals (the “IBLA”).
Pursuant to an agreement with the Helix Well Containment Group, we are required to make payments quarterly in advance to have access to certain equipment to respond to a subsea spill should a spill occur at a property we operate. As of December 31, 2017, our commitment is $1.5 million for 2018. These payments may increase or decrease depending on whether the number of companies participating in the consortium changes.
We have no drilling rig commitments with a term that exceeded one year as of December 31, 2017 and our drilling rig commitments meet the criteria of an operating lease. Future payments of all drilling rig commitments as of December 31, 2017 were $5.7 million.
The entire disclosure for significant arrangements with third parties, which includes operating lease arrangements and arrangements in which the entity has agreed to expend funds to procure goods or services, or has agreed to commit resources to supply goods or services, and operating lease arrangements. Descriptions may include identification of the specific goods and services, period of time covered, minimum quantities and amounts, and cancellation rights.
Reference 1: http://www.xbrl.org/2003/role/presentationRef