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 March 31, 2024, 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 March 2023, Excelerate exercised its option to purchase 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.

Finance lease liabilities as of March 31, 2024 and December 31, 2023 consisted of the following (in thousands):


	March 31, 2024			December 31, 2023
Finance lease liabilities	$	206,885		$	211,887
Less current portion of finance lease liabilities		(22,411	)		(22,080	)
Finance lease liabilities, long-term	$	184,474		$	189,807

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.

Operating lease right-of-use assets are included within other assets on the consolidated balance sheets. The current and non-current portions of operating lease liabilities are included within accrued liabilities and other liabilities and other long-term liabilities, respectively, on the consolidated balance sheets.

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, 2024 is as follows (in thousands):


Year	Operating			Finance
Remainder of 2024	$	1,562		$	24,936
2025		1,806			33,235
2026		1,434			33,235
2027		1,025			33,235
2028		886			27,584
Thereafter		448			113,152
Total lease payments	$	7,161		$	265,377
Less: imputed interest		(845	)		(58,492	)
Carrying value of lease liabilities		6,316			206,885
Less: current portion		(1,714	)		(22,411	)
Carrying value of long-term lease liabilities	$	4,602		$	184,474

As of March 31, 2024, the Company’s weighted average remaining lease term for operating and finance leases was 4.1 years and 8.8 years, respectively, with a weighted average discount rate of 6.2% and 6.3%, respectively. 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.

The Company’s total lease costs for the three months ended March 31, 2024 and 2023 recognized in the consolidated statements of income consisted of the following (in thousands):


	For the three months ended March 31,
	2024		2023
Amortization of finance lease right-of-use assets	$	652	$	1,017
Interest on finance lease liabilities		3,282		4,085
Operating lease expense		449		8,454
Short-term lease expense		253		174
Total lease costs	$	4,636	$	13,730

Other information related to leases for the three months ended March 31, 2024 and 2023 are as follows (in thousands):


	For the three months ended March 31,
	2024		2023
Operating cash flows for finance leases	$	3,282	$	4,085
Financing cash flows for finance leases		5,001		5,297
Operating cash flows for operating leases		520		8,314