XML 23 R10.htm IDEA: XBRL DOCUMENT v3.20.2
LEASES
 6 Months Ended
Jun. 30, 2020
Leases [Abstract]  
LEASES LEASES
The Company’s right-of-use assets and lease liabilities are recognized at their discounted present value on the balance sheet, which include leases related to the asset classes reflected as of the dates indicated in the table below (in thousands):
June 30, 2020December 31, 2019
Operating leases
Field equipment(1)
$34,118  $35,057  
Corporate leases1,921  2,462  
Vehicles 694  1,043  
Total right-of-use asset$36,733  $38,562  
Field equipment(1)
$34,141  $35,075  
Corporate leases2,486  3,129  
Vehicles671  1,026  
Total lease liability$37,298  $39,230  
Finance leases
Right-of-use asset - field equipment(1)
$219  $—  
Lease liability - field equipment(1)
$178  $—  
__________________________
(1) Includes compressors, certain gas processing equipment, and other field equipment.

The lease amounts disclosed are presented on a gross basis. A portion of these costs may have been or will be billed to other working interest owners, and the Company's net share of these costs, once paid, are included in various line items on the statements of operations or capitalized to oil and gas properties or other property and equipment, as applicable.
The Company recognizes operating lease expense on a straight-line basis. Finance lease expense is recognized based on the effective interest method for the lease liability and straight-line amortization for the right-of-use asset, resulting in more cost being recognized in earlier lease periods. Short-term and variable lease payments are recognized as incurred. Short-term lease cost represents payments for leases with a lease term of one year or less, excluding leases with a term of one month or less. Short-term leases include drilling rigs and other equipment. Drilling rig contracts are structured based on an allotted number of wells to be drilled consecutively at a daily operating rate. Short-term drilling rig costs include a non-lease labor component, which is treated as a single lease component.
The following table summarizes the components of the Company's gross lease costs incurred during the three and six months ended June 30, 2020 and 2019 (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
Operating lease cost(1)
$3,607  $2,686  $7,098  $5,036  
Finance lease cost:
Amortization of right-of-use assets
5  —  7  —  
Interest on lease liabilities1  —  2  —  
Short-term lease cost292  2,000  1,882  3,822  
Variable lease cost(2)
(135) 109  (44) 129  
Sublease income(3)
(89) (87) (178) (174) 
Total lease cost$3,681  $4,708  $8,767  $8,813  
____________________________
(1) Includes office rent expense of $0.3 million for the three months ended June 30, 2020 and 2019 and $0.5 million for the six months ended June 30, 2020 and 2019.
(2) Variable lease cost represents differences between lease obligations and actual costs incurred for certain leases that do not have fixed payments related to both lease and non-lease components. Such incremental costs include lease payment increases or decreases driven by market price fluctuations and leased asset maintenance costs.
(3) The Company subleased a portion of its office space for the remainder of the office lease term.

The Company does not have any leases with an implicit interest rate that can be readily determined. As a result, the Company used the incremental borrowing rate, based on the Credit Facility benchmark rate, adjusted for facility utilization and lease term, to calculate the respective discount rates. Please refer to Note 5 - Long-term Debt for additional information.
The Company has certain lease agreements that provide for the option to extend, purchase, or terminate early, which was evaluated on each lease to arrive at the proper lease term. There were some leases for which the option to extend or purchase was factored into the resulting lease term. There were no leases where early termination was factored into the resulting lease term. The Company's weighted-average remaining lease terms and discount rates as of June 30, 2020 are as follows:
Operating LeasesFinance Leases
Weighted-average lease term (years)3.250.67
Weighted-average discount rate 3.89%3.47%
Supplemental cash flow information related to leases for the three and six months ended June 30, 2020 and 2019 consisted of the following (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$3,279  $2,334  $6,412  $4,366  
Operating cash flows from finance leases1  —  2  —  
Financing cash flows from finance leases30  —  40  —  
Right-of-use assets obtained in exchange for new operating lease obligations$1,944  $8,884  $7,388  $10,081  
Right-of-use assets obtained in exchange for new finance lease obligations—  —  219  —  
Future commitments by year for the Company's operating and finance leases with a lease term of one year or more as of June 30, 2020 are presented in the table below. Such commitments are reflected at undiscounted values and are reconciled to the discounted present value recognized on the balance sheet as follows (in thousands):
Operating LeasesFinance Leases
Remainder of 2020$7,089  $64  
202112,860  117  
202210,504  —  
20236,644  —  
20242,439  —  
Thereafter108  —  
Total lease payments39,644  181  
Less: imputed interest(2,346) (3) 
Total lease liability$37,298  $178  
LEASES LEASES
The Company’s right-of-use assets and lease liabilities are recognized at their discounted present value on the balance sheet, which include leases related to the asset classes reflected as of the dates indicated in the table below (in thousands):
June 30, 2020December 31, 2019
Operating leases
Field equipment(1)
$34,118  $35,057  
Corporate leases1,921  2,462  
Vehicles 694  1,043  
Total right-of-use asset$36,733  $38,562  
Field equipment(1)
$34,141  $35,075  
Corporate leases2,486  3,129  
Vehicles671  1,026  
Total lease liability$37,298  $39,230  
Finance leases
Right-of-use asset - field equipment(1)
$219  $—  
Lease liability - field equipment(1)
$178  $—  
__________________________
(1) Includes compressors, certain gas processing equipment, and other field equipment.

The lease amounts disclosed are presented on a gross basis. A portion of these costs may have been or will be billed to other working interest owners, and the Company's net share of these costs, once paid, are included in various line items on the statements of operations or capitalized to oil and gas properties or other property and equipment, as applicable.
The Company recognizes operating lease expense on a straight-line basis. Finance lease expense is recognized based on the effective interest method for the lease liability and straight-line amortization for the right-of-use asset, resulting in more cost being recognized in earlier lease periods. Short-term and variable lease payments are recognized as incurred. Short-term lease cost represents payments for leases with a lease term of one year or less, excluding leases with a term of one month or less. Short-term leases include drilling rigs and other equipment. Drilling rig contracts are structured based on an allotted number of wells to be drilled consecutively at a daily operating rate. Short-term drilling rig costs include a non-lease labor component, which is treated as a single lease component.
The following table summarizes the components of the Company's gross lease costs incurred during the three and six months ended June 30, 2020 and 2019 (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
Operating lease cost(1)
$3,607  $2,686  $7,098  $5,036  
Finance lease cost:
Amortization of right-of-use assets
5  —  7  —  
Interest on lease liabilities1  —  2  —  
Short-term lease cost292  2,000  1,882  3,822  
Variable lease cost(2)
(135) 109  (44) 129  
Sublease income(3)
(89) (87) (178) (174) 
Total lease cost$3,681  $4,708  $8,767  $8,813  
____________________________
(1) Includes office rent expense of $0.3 million for the three months ended June 30, 2020 and 2019 and $0.5 million for the six months ended June 30, 2020 and 2019.
(2) Variable lease cost represents differences between lease obligations and actual costs incurred for certain leases that do not have fixed payments related to both lease and non-lease components. Such incremental costs include lease payment increases or decreases driven by market price fluctuations and leased asset maintenance costs.
(3) The Company subleased a portion of its office space for the remainder of the office lease term.

The Company does not have any leases with an implicit interest rate that can be readily determined. As a result, the Company used the incremental borrowing rate, based on the Credit Facility benchmark rate, adjusted for facility utilization and lease term, to calculate the respective discount rates. Please refer to Note 5 - Long-term Debt for additional information.
The Company has certain lease agreements that provide for the option to extend, purchase, or terminate early, which was evaluated on each lease to arrive at the proper lease term. There were some leases for which the option to extend or purchase was factored into the resulting lease term. There were no leases where early termination was factored into the resulting lease term. The Company's weighted-average remaining lease terms and discount rates as of June 30, 2020 are as follows:
Operating LeasesFinance Leases
Weighted-average lease term (years)3.250.67
Weighted-average discount rate 3.89%3.47%
Supplemental cash flow information related to leases for the three and six months ended June 30, 2020 and 2019 consisted of the following (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$3,279  $2,334  $6,412  $4,366  
Operating cash flows from finance leases1  —  2  —  
Financing cash flows from finance leases30  —  40  —  
Right-of-use assets obtained in exchange for new operating lease obligations$1,944  $8,884  $7,388  $10,081  
Right-of-use assets obtained in exchange for new finance lease obligations—  —  219  —  
Future commitments by year for the Company's operating and finance leases with a lease term of one year or more as of June 30, 2020 are presented in the table below. Such commitments are reflected at undiscounted values and are reconciled to the discounted present value recognized on the balance sheet as follows (in thousands):
Operating LeasesFinance Leases
Remainder of 2020$7,089  $64  
202112,860  117  
202210,504  —  
20236,644  —  
20242,439  —  
Thereafter108  —  
Total lease payments39,644  181  
Less: imputed interest(2,346) (3) 
Total lease liability$37,298  $178