The Company leases certain office space, processing plants, drilling rigs and completion services, gas gathering lines, compressor stations, and other office and field equipment. Leases with an initial term of 12 months or less are considered short-term and are not recorded on the balance sheet. Instead, the short-term leases are recognized in expense on a straight-line basis over the lease term.

Most leases include one or more options to renew, with renewal terms that can extend the lease from one to 20 years or more. The exercise of the lease renewal options is at the Company’s sole discretion. The depreciable lives of the leased assets are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.

Certain of the Company’s lease agreements include minimum payments based on a percentage of produced volumes over contractual levels and others include rental payments adjusted periodically for inflation.

The Company considers all contracts that have assets specified in the contract, either explicitly or implicitly, that the Company has substantially all of the capacity of the asset, and has the right to obtain substantially all of the economic benefits of that asset, without the lessor’s ability to have a substantive right to substitute that asset, as leased assets. For any contract deemed to include a leased asset, that asset is capitalized on the balance sheet as a right-of-use asset and a corresponding lease liability is recorded at the present value of the known future minimum payments of the contract using a discount rate on the date of commencement. The leased asset classification is determined at the date of recording as either operating or financing, depending upon certain criteria of the contract.

The discount rate used for present value calculations is the discount rate implicit in the contract. If an implicit rate is not determinable, a collateralized incremental borrowing rate is used at the date of commencement. As new leases commence or previous leases are modified the discount rate used in the present value calculation is the current period applicable discount rate.

The Company has made an accounting policy election to adopt the practical expedient for combining lease and non-lease components on an asset class basis. This expedient allows the Company to combine non-lease components such as real estate taxes, insurance, maintenance, and other operating expenses associated with the leased premises with the lease component of a lease agreement on an asset class basis when the non-lease components of the agreement cannot be easily bifurcated from the lease payment. Currently, the Company is only applying this expedient to certain office space agreements.

The Company’s lease assets and liabilities consisted of the following items (in thousands):


		December 31,
Leases	Balance Sheet Classification	2021		2022
Operating Leases
Operating lease right-of-use assets:
Processing plants	Operating lease right-of-use assets	$	1,739,550		1,849,116
Drilling rigs and completion services	Operating lease right-of-use assets		9,860		85,405
Gas gathering lines and compressor stations ⁽¹⁾	Operating lease right-of-use assets		1,634,928		1,463,756
Office space	Operating lease right-of-use assets		33,083		41,822
Vehicles	Operating lease right-of-use assets		2,009		756
Other office and field equipment	Operating lease right-of-use assets		482		3,476
Total operating lease right-of-use assets		$	3,419,912		3,444,331

Short-term operating lease obligation	Short-term lease liabilities	$	455,950		556,137
Long-term operating lease obligation	Long-term lease liabilities		2,963,962		2,888,194
Total operating lease obligation		$	3,419,912		3,444,331

Finance Leases
Finance lease right-of-use assets:
Vehicles	Other property and equipment	$	550		2,159
Total finance lease right-of-use assets ⁽²⁾		$	550		2,159

Short-term finance lease obligation	Short-term lease liabilities	$	397		499
Long-term finance lease obligation	Long-term lease liabilities		153		1,660
Total finance lease obligation		$	550		2,159

(1)	Gas gathering lines and compressor stations includes $1.5 billion and $1.4 billion of leases related to Antero Midstream as of December 31, 2021 and 2022, respectively. See “—Related party lease disclosure” for additional discussion.

(2)	Financing lease assets are recorded net of accumulated amortization of approximately $2 million and $1 million as of 2021 and 2022, respectively.

The processing plants, gathering lines and compressor stations that are classified as lease liabilities are classified as such under ASC 842, Leases, because Antero (i) is the sole customer of the assets and (ii) makes the decisions that most impact the economic performance of the assets.

(b)	Supplemental Information Related to Leases

Costs associated with operating and finance leases were included in the consolidated statement of operations and comprehensive loss (in thousands):


			Year Ended December 31,
Cost	Classification	Location	2020		2021		2022
Operating lease cost	Statement of operations	Gathering, compression, processing and transportation	$	1,498,221		1,518,305		1,481,022
Operating lease cost	Statement of operations	General and administrative		11,530		10,901		11,472
Operating lease cost	Statement of operations	Contract termination		8,528		4,213		12,000
Operating lease cost	Statement of operations	Lease operating		—		142		177
Operating lease cost	Balance sheet	Proved properties ⁽¹⁾		104,146		103,741		123,756
Total operating lease cost			$	1,622,425		1,637,302		1,628,427

Finance lease cost:
Amortization of right-of-use assets	Statement of operations	Depletion, depreciation and amortization	$	872		522		351
Interest on lease liabilities	Statement of operations	Interest expense		208		352		193
Total finance lease cost			$	1,080		874		544

Short-term lease payments			$	122,577		86,039		141,470

(1)	Capitalized costs related to drilling and completion activities.

(c)	Supplemental Cash Flow Information Related to Leases

The following table presents the Company’s supplemental cash flow information related to leases (in thousands):


	Year Ended December 31,
	2020		2021		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,576,984		1,352,941		1,380,968
Operating cash flows from finance leases		208		352		193
Investing cash flows from operating leases		106,867		88,910		103,244
Financing cash flows from finance leases		1,291		859		575

Noncash activities:
Right-of-use assets obtained in exchange for new operating lease obligations	$	202,125		437,045		366,194
Increase (decrease) to existing right-of-use assets and lease obligations from operating lease modifications, net ⁽¹⁾	$	(173,563)		702,512		154,101

(1)

During the year ended December 31, 2020, the weighted average discount rate for remeasured operating leases increased from 10.0% as of December 31, 2019 to 14.4% as of December 31, 2020. During the year ended December 31, 2021, the weighted average discount rate for remeasured operating leases decreased from 14.4% as of December 31, 2020 to 5.0% as of December 31, 2021. During the year ended December 31, 2022, the weighted average discount rate for remeasured operating leases decreased from 5.6% as of December 31, 2021 to 5.2% as of December 31, 2022.

(d) Maturities of Lease Liabilities

The table below is a schedule of future minimum payments for operating and financing lease liabilities as of December 31, 2022 (in thousands):


	Operating Leases		Financing Leases		Total
2023	$	725,926		815		726,741
2024		661,987		807		662,794
2025		587,393		764		588,157
2026		534,508		429		534,937
2027		442,252		—		442,252
Thereafter		1,203,662		—		1,203,662
Total lease payments		4,155,728		2,815		4,158,543
Less: imputed interest		(711,397)		(656)		(712,053)
Total	$	3,444,331		2,159		3,446,490

(e) Lease Term and Discount Rate

The following table sets forth the Company’s weighted-average remaining lease term and discount rate:


	December 31, 2021				December 31, 2022
	Operating Leases		Finance Leases		Operating Leases		Finance Leases
Weighted average remaining lease term	7.6 years		1.9 years		7.2 years		3.5 years
Weighted average discount rate	5.5	%	5.6	%	5.3	%	7.4	%

(f) Related Party Lease Disclosure

The Company has gathering and compression service agreements with Antero Midstream that include: (i) the second amended and restated gathering and compression agreement dated December 8, 2019 (the “2019 gathering and compression agreement”), (ii) gathering and compression agreements from Antero Midstream’s acquisition of certain Marcellus gathering and compression assets (the “Marcellus gathering and compression agreements”) and (iii) a compression agreement from Antero Midstream’s acquisition of certain Utica compressors (the “Utica compression agreement” and, together with the 2019 gathering and compression agreement and the Marcellus gathering and compression agreements, the “gathering and compression agreements”). Pursuant to the gathering and compression agreements with Antero Midstream, the Company has dedicated substantially all of its current and future acreage in West Virginia, Ohio and Pennsylvania to Antero Midstream for gathering and compression services. The 2019 gathering and compression agreement has an initial term through 2038, the Marcellus gathering and compression agreements expire between 2024 and 2031, and the Utica compression agreement has two dedicated areas that expire in 2024 and 2030. Upon expiration of each of the Marcellus gathering and compression service agreements and the Utica compression agreement, Antero Midstream will continue to provide gathering and compression services under the 2019 gathering and compression agreement.

Under the gathering and compression agreements, Antero Midstream receives a low-pressure gathering fee per Mcf, a high-pressure gathering fee per Mcf and a compression fee per Mcf, as applicable, subject to annual adjustments based on the consumer price index. If and to the extent the Company requests that Antero Midstream construct new low pressure lines, high pressure lines and compressor stations, the gathering and compression agreement contains options at Antero Midstream’s election for either (i) minimum volume commitments that require Antero Resources to utilize or pay for 75% of the high pressure gathering capacity and 70% of the compression capacity of the requested capacity of such new construction for 10 years or (ii) a cost of service fee that allows the Antero Midstream to earn a 13% rate of return on such new construction over seven years.

The 2019 gathering and compression agreement includes a growth incentive fee program whereby low-pressure gathering fees will be reduced from 2020 through 2023 to the extent the Company achieves certain quarterly volumetric targets. The Company’s throughput on acquired assets is not considered in low pressure gathering volume targets. Upon completion of the initial contract term, the 2019 gathering and compression agreement will continue in effect from year to year until such time as the agreement is terminated, effective upon an anniversary of the effective date of the agreement, by either the Company or Antero Midstream on or before the 180^th day prior to the anniversary of such effective date. The Company earned fee rebates for the years

ended December 31, 2020, 2021 and 2022 of $48 million, $12 million and $48 million, respectively.

For the years ended December 31, 2020, 2021 and 2022, gathering and compression fees paid by Antero related to these agreements were $679 million, $705 million and $660 million, respectively. As of December 31, 2021 and 2022, $54 million and $59 million, respectively was included within Accounts payable, related parties, on the consolidated balance sheet as due to Antero Midstream related to these agreements.