Leases

12 Months Ended

Dec. 31, 2023

Effective January 1, 2022, the Company adopted ASU No. 2016-02, Leases (Topic 842). The new standard superseded the previous lease guidance by requiring lessees to recognize a right-of-use asset and lease liability on the balance sheet for all

leases with lease terms of greater than one year while maintaining substantially similar classifications for financing and operating leases.

Nature of Leases

The Company has operating leases on various vehicles and compressors with remaining lease durations in excess of one year. These leases have various expiration dates through 2027. The vehicles are used for field operations and leased from third parties. The Company recognizes right-of-use asset and lease liability on the balance sheet for all leases with lease terms of greater than one year. Short-term leases that have an initial term of one year or less are not capitalized.

Discount Rate

As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The Company’s incremental borrowing rate reflects the estimated rate of interest that it would pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

Future amounts due under operating lease liabilities as of December 31, 2023, were as follows (in thousands):


2024	$	11,325
2025	4,796
2026	1,586
2027	604
Total lease payments	18,311
Less: imputed interest	(841)
Total	$	17,470

The following table summarizes our total lease costs before amounts are recovered from our joint interest partners, where applicable, for the years ended December 31, 2023 and 2022 (in thousands):


	Year ended December 31,
	2023		2022
Operating lease cost	$	14,309	$	7,462
Short-term lease cost	11,579		9,300
Total lease cost	$	25,888	$	16,762

The weighted-average remaining lease term as of December 31, 2023 was 1.87 years. The weighted-average discount rate used to determine the operating lease liability as of December 31, 2023 was 5.07%.


	Year ended December 31,
	2023		2022
Operating cash flows from operating leases	$	14,066	$	6,707