Note 7 - Leases

6 Months Ended

Jun. 30, 2021

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

NOTE 7 – LEASES

The Company has operating leases for right-of-way agreements, corporate offices, vehicles and office equipment. The Company’s leases have remaining lease terms of 3 months to 29 years as of June 30, 2021, some of which include options to extend or terminate the lease. However, the Company is not reasonably certain to exercise options to renew or terminate, and therefore renewal and termination options are not considered in the lease term or the right-of-use asset and lease liability balances. The Company's current lease arrangements expire from 2021 through 2049. The Company does not have any finance leases.

During the six months ended June 30, 2021, the Company entered into new operating leases which resulted in recording right-of-use assets and lease liabilities in the amount of $3.3 million.

Lease balances. Amounts recognized in the accompanying consolidated balance sheet as of June 30, 2021 and December 31, 2020 are as follows (in thousands):

As of June 30, 2021
Activity	Balance Sheet Location	Balance
ROU assets	Right-of-use asset	$	3,294
Short-term lease liability	Operating lease liabilities	$	25
Long-term lease liability	Long-term operating lease liabilities	$	3,109

As of December 31, 2020
Activity	Balance Sheet Location	Balance
ROU assets	Right-of-use asset	$	15
Short-term lease liability	Operating lease liabilities	$	15
Long-term lease liability	Long-term lease liabilities	$	-

Lease cost. The Company’s operating lease cost for the six months ended June 30, 2021 was $174 thousand.

Lease commitments. The table below summarizes the Company’s scheduled future minimum lease payments under operating, recorded on the balance sheet as of June 30, 2021 (in thousands):

2021	$	322
2022		321
2023		321
2024		321
2025+		7,692
Total lease payments		8,977
Less: Imputed interest		(5,843	)
Present value of lease payments		3,134
Less: current maturities of lease obligations		(25	)
Long-term lease obligations	$	3,109

The table below presents additional information related to our leases as of June 31, 2021:

Weighted Average Remaining Lease Term
Operating leases (in years)	29
Weighted Average Discount Rate
Operating leases	10	%

On December 14, 2020, the Company entered into two 29-year right-of-way agreements with the United States Bureau of Land Management (“BLM”) with respect to the Company’s Northern Pipeline asset. The right-of-way agreements, which became effective on January 1, 2021, have a combined annual rent expense of approximately $321,000, with annual defined inflation increases.

From a lessor standpoint, in February 2016, the Company entered into a lease agreement with Fenner Valley Farms LLC (“FVF”) (the “lessee”), pursuant to which FVF is leasing, for a 99-year term, 2,100 acres owned by Cadiz in San Bernardino County, California, to be used to plant, grow and harvest agricultural crops (“FVF Lease Agreement”). As consideration for the lease, FVF paid the Company a one-time payment of $12.0 million upon closing. The Company expects to receive rental income of $420 thousand annually over the next five years related to the FVF Lease Agreement.