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 March 31, 2023, the Company was a lessee in finance lease arrangements on one bareboat charter contract, one pipeline capacity agreement and one tugboat. The pipeline capacity agreement and tugboat lease were determined to be finance leases as their terms represent the majority of the economic life of their respective assets. 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.

In March 2023, Excelerate exercised its option to purchase the FSRU Sequoia, which triggered a reassessment of the associated lease. As our acquisition of Sequoia was reasonably certain as of March 31, 2023, the lease on the vessel was reclassified from an operating lease to a financing lease. 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. EELP, as a lessor, accounts for the Excellence vessel contract with our customer as a sales-type lease in the consolidated balance sheet in accordance with ASC 842. For more information regarding the purchase of the vessels, see Note 8 – Property and equipment.

Finance lease liabilities as of March 31, 2023 and December 31, 2022 consisted of the following (in thousands):


	March 31, 2023			December 31, 2022
External leases:
Finance lease liabilities	$	492,139		$	231,158
Less current portion of finance lease liabilities		(46,183	)		(20,804	)
Finance lease liabilities, long-term	$	445,956		$	210,354

As of March 31, 2023, the Company was a lessee in a terminal use lease, which is accounted for as an operating lease.

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 March 31, 2023 is as follows (in thousands):


Year	Operating			Finance
Remainder of 2023	$	7,890		$	291,333
2024		1,826			33,248
2025		1,520			33,235
2026		938			33,235
2027		912			33,235
Thereafter		1,335			141,120
Total lease payments	$	14,421		$	565,406
Less: imputed interest		(860	)		(73,267	)
Carrying value of lease liabilities		13,561			492,139
Less: current portion		(7,838	)		(46,183	)
Carrying value of long-term lease liabilities	$	5,723		$	445,956

As of March 31, 2023, the Company’s weighted average remaining lease term for operating and finance leases was 3.0 years and 4.5 years, respectively, with a weighted average discount rate of 5.4% and 5.7%, respectively. As of December 31, 2022, the Company’s weighted average remaining lease term for operating and finance leases was 2.6 years and 10.1 years, respectively, with a weighted average discount rate of 5.9% and 6.3%, respectively.

The Company's total lease costs for the three months ended March 31, 2023 and 2022 recognized in the consolidated statements of income consisted of the following (in thousands):


	For the three months ended March 31,
	2023		2022
Amortization of finance lease right-of-use assets – related party	$	—	$	1,226
Amortization of finance lease right-of-use assets – external		1,017		652
Interest on finance lease liabilities – related party		—		7,006
Interest on finance lease liabilities – external		4,085		3,919
Operating lease expense		8,454		9,475
Short-term lease expense		174		387
Total lease costs	$	13,730	$	22,665

Other information related to leases for the three months ended March 31, 2023 and 2022 are as follows (in thousands):


	For the three months ended March 31,
	2023		2022
Operating cash flows for finance leases	$	4,085	$	3,919
Operating cash flows for finance leases – related party		—		7,006
Financing cash flow for finance leases		5,297		5,345
Financing cash flow for finance leases – related party		—		2,912
Operating cash flows for operating leases		8,314		8,837
Right-of-use assets obtained in exchange for new operating lease liabilities		—		219