LEASES

12 Months Ended

Dec. 31, 2023

We have operating leases primarily for carbon sequestration easements, drilling rigs, vehicles and commercial office space. We have recorded the following amounts on our balance sheet as of December 31, 2023 and 2022:



	Classification	2023		2022
		(in millions)
Right-of-use assets	Other noncurrent assets	$	73	$	73



Lease liabilities	Accrued liabilities	$	15	$	18

Lease liabilities	Other long-term liabilities	$	55	$	52

We determine if our arrangements contain a lease at inception.

We combine lease and nonlease components in determining fixed minimum lease payments for our drilling rigs and commercial office space. If applicable, fixed minimum lease payments are reduced by lease incentives for our commercial office space and increased by mobilization and demobilization fees for our drilling rigs. Certain of our lease agreements include options to extend or terminate the lease, which we may exercise at our sole discretion. For our existing leases, we did not include these options in determining our fixed minimum lease payments over the lease term. Our leases do not include options to purchase the leased property. Lease agreements for our fleet vehicles include residual value guarantees, none of which are recognized in our financial statements until the underlying contingency is resolved.

Variable lease costs for our drilling rigs include costs to operate, move and repair the rigs. Variable lease costs for commercial office space includes utilities and common area maintenance charges. Variable lease costs for our fleet vehicles include other-than-routine maintenance and other various amounts in excess of our fixed minimum rental fee.

Our lease costs, including amounts capitalized to PP&E, shown in the table below are before joint-interest recoveries. Lease payments are reduced by joint interest recoveries on our consolidated statement of operations through our joint-interest billing process.



	Year ended December 31,		Year ended December 31,
	2023		2022
	(in millions)



Operating lease costs	$	23	$	17
Short-term lease costs(a)	52		59
Variable lease costs	2		6
Total operating lease costs	77		82

Sublease income	(2)		(1)
Total lease costs	$	75	$	81

(a)Contracts with terms of less than one month or less are excluded from our disclosure of short-term lease costs.

We had two contracts treated as finance leases, where the terms ended in 2022. These leases were not material to our consolidated results of operations for the periods presented.

We sublease certain commercial office space to third parties where we are the primary obligor under the head lease. The lease terms on those subleases never extend past the term of the head lease and the subleases contain no extension options or residual value guarantees. Sublease income is recognized based on the contract terms and included as a reduction of operating lease cost under our head lease.

Other supplemental information related to our operating leases as of December 31, 2023 and 2022 is provided below:



	Year ended December 31,		Year ended December 31,
	2023		2022
	(in millions)
Cash paid for lease liabilities
Lease liabilities associated with operating activities	$	28	$	14
Lease liabilities associated with investing activities	$	2	$	6


ROU assets obtained in exchange for new operating lease liabilities	$	32	$	35



	2023		2022
Operating Leases
Weighted-average remaining lease term (in years)	7.34		6.43
Weighted-average discount rate	6.7	%	6.1	%

Our operating lease payments are as follows:



	As of
	December 31, 2023
	(in millions)
2024	$	18
2025	14
2026	12
2027	10
2028	9
Thereafter	27
Less: Interest	(20)
Present value of lease liabilities	$	70