Commitments and Contingencies
|12 Months Ended|
Dec. 31, 2021
|Commitments and Contingencies.|
|Commitments and Contingencies||
13.Commitments and Contingencies
In the normal course of business, we are subjected to various claims, legal actions, contract negotiations and disputes. We provide for losses, if any, in the period in which they become probable and can be reasonably estimated. In management’s opinion, there are currently no such matters outstanding that would have a material effect on the accompanying financial statements.
Additionally, we are party to a guarantee related to a lease agreement with Solaris Energy Management, LLC (“SEM”), a related party of the Company, for the rental of office space at our corporate headquarters. As of December 31, 2021, our share of SEM’s future commitment related to this lease agreement is $3.0 million. See Note 16. Related Party Transactions.
In the normal course of business, we enter short-term purchase obligations for products and services, primarily related to purchases of pipe, pumps and other components. As of December 31, 2021, we have purchase obligations and commitments of approximately $11.0 million due in the next twelve months.
We are party to a surface use and compensation agreement by which we have agreed to a minimum annual payment for each of the first ten years beginning in 2020, in exchange for certain rights to access and use the land for the limited purposes of conducting water operations for a period of thirteen years. The minimum annual payments are subject to netting against royalty payments paid. Minimum annual payments begin in 2022.
The table below provides estimates of the timing of future payments that we are contractually obligated to make based on agreements in place as of December 31, 2021:
We are also subject to various federal, state and local laws and regulations relating to the protection of the environment. For the years ended December 31, 2021, 2020 and 2019, we recognized $3.1 million, $6.5 million and $0 of expenses, respectively, related to environmental matters that were recorded in Operating Expense. We also recognized $3.1 million of insurance proceeds receivable at December 31, 2021 that we believe are probable to collect and are reasonably estimable. Although we believe these estimates are reasonable, actual results could differ from these estimates.
The entire disclosure for commitments and contingencies.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef