Leases

12 Months Ended

Dec. 31, 2019

Magnolia’s leases primarily consist of real estate, vehicles, and field equipment. The Company’s leases have remaining lease terms of up to 8 years, some of which include options to renew or terminate the lease. The exercise of lease renewal options is at the Company’s sole discretion. Magnolia’s lease agreements do not contain any residual value guarantees or restrictive covenants.

As most of Magnolia’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company used the incremental borrowing rate on January 1, 2019, for operating leases that commenced prior to that date.



(In thousands)	December 31, 2019
Operating Leases
Operating lease assets	$	4,035

Operating lease liabilities - current	$	2,550
Operating lease liabilities - long-term	1,476
Total operating lease liabilities	$	4,026

Weighted average remaining lease term (in years)	1.9
Weighted average discount rate	3.8		%

For the year ended December 31, 2019, the Company incurred $2.8 million of lease costs for operating leases included on the Company’s consolidated balance sheet, $26.9 million for short-term lease costs, and $3.2 million for variable lease costs. Cash paid for amounts included in the measurement of lease liabilities in operating cash flows from operating leases for the year ended December 31, 2019 is $2.8 million.

Maturities of lease liabilities as of December 31, 2019 under the scope of ASC 842 are as follows:



(In thousands)
Maturity of Lease Liabilities ⁽¹⁾	Operating Leases
2020	$	2,647
2021	1,170
2022	165
2023	98
2024	43
After 2024	48
Total lease payments	$	4,171
Less: Interest	(145		)
Present value of lease liabilities	$	4,026

(1)

As of December 31, 2018, minimum future contractual payments for long-term operating leases under the scope of ASC 840 were $881 thousand in 2019, $646 thousand in 2020, $198 thousand in 2021, $14 thousand in 2022, $15 thousand in 2023 and $63 thousand thereafter.