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, net on the consolidated balance sheets. Lease obligations are recognized based on the rate implicit in the lease or the Company’s incremental borrowing rate at lease commencement.

As of December 31, 2023, 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 as their terms represent the majority of the economic life of their respective 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 Excellence with the vessel transferring ownership to the customer at the conclusion of the agreement for no additional consideration. EELP, as a lessor, accounts for Excellence 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, net.

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


	December 31, 2023			December 31, 2022
External leases:
Finance lease liabilities	$	211,887		$	231,158
Less current portion of finance lease liabilities		(22,080	)		(20,804	)
Finance lease liabilities, long-term	$	189,807		$	210,354

As of December 31, 2023, the Company was a lessee in a terminal use lease, which was accounted for as an operating lease. In January 2024, this agreement transitioned to a TCP agreement.

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.

In March 2023, Excelerate exercised its option to purchase Sequoia and the purchase was executed in April 2023. As of December 31, 2022, Sequoia was recorded as an operating lease. See Note 8 – Property and equipment, net for further information about the purchase.

A maturity analysis of the Company’s operating and finance lease liabilities (excluding short-term leases) at December 31, 2023 is as follows (in thousands):


Year	Operating			Finance
2024	$	2,111		$	33,248
2025		1,811			33,235
2026		1,085			33,235
2027		911			33,235
2028		886			27,584
Thereafter		449			113,537
Total lease payments	$	7,253		$	274,074
Less: imputed interest		(504	)		(62,187	)
Carrying value of lease liabilities		6,749			211,887
Less: current portion		(1,744	)		(22,080	)
Carrying value of long-term lease liabilities	$	5,005		$	189,807

As of December 31, 2023, the Company’s weighted average remaining lease term for operating and finance leases was 4.3 years and 9.1 years, respectively, with a weighted average discount rate of 6.2% and 6.3%, 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 years ended December 31, 2023, 2022 and 2021 recognized in the consolidated statements of income consisted of the following (in thousands):


	For the years ended December 31,
	2023		2022		2021
Amortization of finance lease right-of-use assets – related party	$	—	$	1,226	$	4,906
Amortization of finance lease right-of-use assets – external		3,487		2,609		13,345
Interest on finance lease liabilities – related party		—		7,930		29,080
Interest on finance lease liabilities – external		15,068		15,172		17,231
Operating lease expense		15,790		37,825		29,489
Short-term lease expense		611		1,164		746
Total lease costs	$	34,956	$	65,926	$	94,797

Other information related to leases for the years ended December 31, 2023, 2022 and 2021 are as follows (in thousands):


	For the years ended December 31,
	2023		2022		2021
Operating cash flows for finance leases	$	15,068	$	15,172	$	17,231
Operating cash flows for finance leases – related party		—		7,930		29,080
Financing cash flows for finance leases		20,619		20,499		36,262
Financing cash flows for finance leases – related party		—		2,912		15,427
Operating cash flows for operating leases		16,518		36,841		29,100
Right-of-use assets obtained in exchange for new operating lease liabilities		—		3,567		15,248