Leases (Tables)

9 Months Ended

Sep. 30, 2024

The components of lease costs were as follows (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Finance lease cost - interest on lease liabilities	$	3,205		$	3,604		$	9,849		$	10,969
Operating lease cost, excluding short-term leases(1)		1,113			1,323			3,123			3,419
Short-term lease cost(2)		2,674			33,152			20,113			103,001
Variable lease cost(3)		616			666			1,848			1,856
Variable and fixed sublease income		(359	)		(207	)		(1,077	)		(276	)
Total lease cost	$	7,249		$	38,538		$	33,856		$	118,969

(1)

Operating lease cost reflect a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a straight-line basis.

(2)

Short-term lease costs are reported at gross amounts and primarily represent costs incurred for drilling rigs, most of which are short-term contracts not recognized as a right-of-use asset and lease liability on the Condensed Consolidated Balance Sheets. The short-term operating lease costs incurred during the periods presented are not indicative of the Company’s current short-term lease obligations, which are approximately $129.2 million as of September 30, 2024, or its future short-term lease costs and obligations, as it routinely enters into short-term contracts for the use of drilling rigs to support its drilling activities.

(3)

Variable lease costs primarily represent differences between minimum payment obligations and actual operating charges incurred by the Company related to its long-term leases.

Schedule of Right-of-Use ("ROU") Asset and Lease Liability, Adjusted for Initial Direct Costs and Incentives

The present value of the fixed lease payments recorded as the Company’s right-of-use (“ROU”) assets and lease liabilities, adjusted for initial direct costs and incentives were as follows (in thousands):


	September 30, 2024		December 31, 2023
Operating leases:
Operating lease assets	$	11,858	$	11,418

Current portion of operating lease liabilities	$	3,933	$	2,666
Operating lease liabilities		16,359		18,211
Total operating lease liabilities	$	20,292	$	20,877

Finance leases:
Proved properties	$	166,261	$	166,261

Other current liabilities	$	19,140	$	17,834
Other long-term liabilities		116,686		131,230
Total finance lease liabilities	$	135,826	$	149,064

Supplemental Cash Flow Information Related to Leases

The table below presents the supplemental cash flow information related to leases (in thousands):


	Nine Months Ended September 30,
	2024		2023
Operating cash outflow from finance leases	$	9,849	$	10,969
Operating cash outflow from operating leases	$	4,149	$	4,880

ROU assets obtained in exchange for new operating lease liabilities(1)	$	1,909	$	12,971
Remeasurement of lease liability arising from modification of ROU asset (2)	$	—	$	(5,124	)

(1)

See QuarterNorth Acquisition and EnVen Acquisition each in Note 2 — Acquisitions and Divestitures.

(2)

Lease termination accounted for as a lease modification based on the modified lease term. The termination did not take effect contemporaneously with the effective date of the modification.