Certain enforceable vessel charters and pipeline capacity agreements are classified as finance leases, and the right-of-use assets are included in property and equipment. Lease obligations are recognized based on the rate implicit in the lease or the Company’s incremental borrowing rate at lease commencement.

As of June 30, 2022, the Company was a lessee in finance lease arrangements on one pipeline capacity agreement and one tugboat. These arrangements were determined to be finance leases due to their terms representing the majority of the economic lives of the assets.

In connection with the IPO, EELP purchased two vessels previously leased and accounted for as related party finance leases. In 2018, EELP entered into an agreement with a customer to lease the Excellence vessel with the vessel transferring ownership to the customer at the conclusion of the agreement for no additional consideration. Historically, EELP, as a lessor, has accounted for the Excellence vessel contract with our customer as a sales-type lease in the consolidated balance sheet in accordance with ASC 842. The Excellence vessel will continue to be accounted for as a sales-type lease. For more information regarding the purchase of the vessels, see Note 8 – Property and equipment.

Finance lease liabilities as of June 30, 2022 and December 31, 2021 consisted of the following (in thousands):


	June 30, 2022			December 31, 2021
External leases:
Finance lease liabilities	$	240,852		$	251,658
Less current portion of finance lease liabilities		(20,643	)		(21,903	)
Finance lease liabilities, long-term	$	220,209		$	229,755

Related party leases:
Finance lease liabilities	$	—		$	226,619
Less current portion of finance lease liabilities		—			(15,627	)
Finance lease liabilities, long-term	$	—		$	210,992

As of June 30, 2022, the Company was a lessee in a bareboat charter contract and terminal use lease, accounted for as operating leases. Pursuant to a bareboat charter, the vessel owner provides the use of the vessel to the Company in exchange for a fixed charter hire rate. However, the Company is responsible for the operation and maintenance of the vessel with its own crew, fuel costs, and other related expenses. As such, the bareboat charter includes a lease component only for the lessee to control the use of the vessel and does not contain non-lease components.

Additionally, the Company has operating leases for offices in various locations in which operations are performed. Such leases will often include options to extend the lease and the Company will include option periods that, on commencement date, it is reasonably certain the Company will exercise. Variable lease costs relate to certain lease agreements, which include payments that vary for items such as inflation adjustments, or common area charges. Variable lease costs that are not dependent on an index are excluded from the lease payments that comprise the operating lease liability and are expensed in the period in which they are incurred. None of the Company's operating leases contain any residual value guarantees.

A maturity analysis of the Company’s operating and finance lease liabilities (excluding short-term leases) at June 30, 2022 is as follows (in thousands):


Year	Operating			Finance
2022	$	18,221		$	18,538
2023		36,374			33,235
2024		28,582			33,248
2025		17,977			33,235
2026		951			33,235
Thereafter		2,255			174,355
Total lease payments	$	104,360		$	325,846
Less: imputed interest		(9,247	)		(84,994	)
Carrying value of lease liabilities		95,113			240,852
Less: current portion		(31,668	)		(20,643	)
Carrying value of long-term lease liabilities	$	63,445		$	220,209

As of June 30, 2022, the Company’s weighted average remaining lease term for operating and finance leases was 3.0 years and 10.8 years, respectively, with a weighted average discount rate of 5.8% and 6.3%, respectively. As of December 31, 2021, the Company’s weighted average remaining lease term for operating and finance leases was 3.4 years and 12.1 years, respectively, with a weighted average discount rate of 5.8% and 9.8%, respectively.

The Company's total lease costs for the three and six months ended June 30, 2022 and 2021 recognized in the consolidated statements of income consisted of the following (in thousands):


	For the three months ended June 30,				For the six months ended June 30,
	2022		2021		2022		2021
Amortization of finance lease right-of-use assets – related party	$	—	$	1,227	$	1,226	$	2,453
Amortization of finance lease right-of-use assets – external		653		3,336		1,305		6,672
Interest on finance lease liabilities – related party		—		7,323		7,006		14,745
Interest on finance lease liabilities – external		3,836		4,378		7,755		8,891
Operating lease expense		9,392		7,128		18,867		14,256
Short-term lease expense		219		232		606		297
Total lease costs	$	14,100	$	23,624	$	36,765	$	47,314

Other information related to leases for the three and six months ended June 30, 2022 and 2021 are as follows (in thousands):


	For the three months ended June 30,				For the six months ended June 30,
	2022		2021		2022		2021
Operating cash flows for finance leases	$	3,836	$	4,378	$	7,755	$	8,891
Operating cash flows for finance leases – related party		—		7,323		7,006		14,745
Financing cash flow for finance leases		5,460		8,989		10,805		17,835
Financing cash flow for finance leases – related party		—		3,865		2,912		7,663
Operating cash flows for operating leases		9,238		7,069		18,075		14,093
Right-of-use assets obtained in exchange for new operating lease liabilities		937		—		1,156		—