Note 7 - Leases

9 Months Ended

Sep. 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 2 months to 28 years as of September 30, 2021. 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 to 2049. The Company does not have any finance leases.

During the nine months ended September 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 September 30, 2021 and December 31, 2020 are as follows (in thousands):

As of September 30, 2021
Activity	Balance Sheet Location	Balance
ROU assets	Right-of-use asset	$	3,287
Short-term lease liability	Operating lease liabilities	$	24
Long-term lease liability	Long-term operating lease liabilities	$	3,183

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 operating lease liabilities	$	-

Lease cost. The Company’s operating lease cost for the nine months ended September 30, 2021 was $255 thousand.

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

2021	$	321
2022		321
2023		321
2024		321
2025+		7,692
Total lease payments		8,976
Less: Imputed interest		(5,769	)
Present value of lease payments		3,207
Less: current maturities of lease obligations		(24	)
Long-term lease obligations	$	3,183

The table below presents additional information related to our leases as of September 30, 2021:

Weighted Average Remaining Lease Term Operating leases (in years)	28
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.