Leases

12 Months Ended

Dec. 31, 2021

Leases.

Leases

Note 16: Leases

The Company has recorded the related Right-Of-Use (ROU) asset and liability at the present value of lease payments over the term, for leases with terms greater than 12 months. Leases that include rental escalation clauses or renewal options are factored into the determination of lease payments when appropriate. There are no residual value guarantees on the existing leases. The Company estimates its incremental borrowing rate, based on the interest rate in the Company’s current credit facility, at lease commencement to determine the present value of lease payments, since most of the Company’s leases do not provide an implicit rate of return. ROU assets exclude lessor incentives received.

The Company subleases certain real estate to third parties. Our sublease portfolio consists solely of operating leases. As of December 31, 2021, the Company had no operating leases that had not yet commenced. During the year ended December 31, 2021, the Company entered into new leases or modified existing leases that resulted in an increase of ROU assets in exchange for operating lease liabilities as disclosed below.

During the year ended December 31, 2021, the Company entered into two Agreements (Agreement 1 and Agreement 2) for certain operating equipment rentals with an industrial manufacturer. Per the terms of Agreement 1, the equipment is being rented for

one year and RPC is required to purchase the assets at the end of the lease term for the guaranteed purchase price less the monthly amounts paid during the year. As a result, the Company classified this arrangement as a finance lease and recorded the lease liability using its one-year incremental borrowing rate. Per the terms of Agreement 2, certain operating equipment is being rented for one year with variable lease payments based on usage, which has been recognized as a short-term lease. Amounts totaling $2.1 million related to this lease are included in the short-term lease costs disclosed below.

Lease Position:

The table below represents the assets and liabilities related to operating leases recorded on the balance sheet:

December 31,	2021		2020
(in thousands)
Assets:
Finance lease right-of-use assets	$	20,327		—
Operating lease right-of-use assets	$	24,572	$	27,270
Liabilities:
Current portion of finance lease		20,194		—
Current portion of operating leases	$	6,387	$	9,192
Long-term operating lease liabilities		19,719		21,090
Total operating lease liabilities	$	26,106	$	30,282

Lease costs:

The cos components of the finance lease are included in depreciation and amortization, and interest expense; operating lease expense are included in costs of goods sold, and selling, general and administrative expenses in the consolidated statements of operations as disclosed below.

Year ended December 31,	2021		2020
(in thousands)
Finance lease cost
Amortization of leased assets	$	1,452	$	—
Interest on lease liabilities		116		—
Total finance lease cost	$	1,568	$	—
Operating lease cost	$	7,580	$	8,373
Short-term lease cost		3,626		2,577
Variable lease cost		772		624
Sublease income		(831)		(295)
Total operating lease cost	$	11,147	$	11,279
Total lease cost	$	12,715	$	11,279

Other information:
As of December 31,	2021			2020
Cash paid for amounts included in the measurement of lease liabilities – operating leases (in thousands)	$	10,151		$	11,922
ROU assets obtained in exchange for operating lease liabilities (in thousands)	$	5,974		$	3,202
ROU assets obtained in exchange for finance lease liabilities (in thousands)	$	21,778			—
Weighted average remaining lease term – finance lease (months)		8			—
Weighted average remaining lease term – operating leases (years)		5.41			5.20
Weighted average discount rate – finance lease		1.7	%		—
Weighted average discount rate – operating leases		2.29	%		2.82	%

Lease Commitments:

Maturity of lease liabilities - Operating Leases:

As of December 31,	2021		2020
(in thousands)
2021	$	—	$	9,911
2022		7,015		6,889
2023		4,483		4,135
2024		3,619		3,127
2025		2,667		2,181
2026		2,421		—
Thereafter		7,742		6,404
Total lease payments		27,947		32,647
Less: Amounts representing interest		(1,841)		(2,365)
Present value of lease liabilities	$	26,106	$	30,282

Maturity of lease liabilities - Finance Lease:

As of December 31, 2021, projected future lease payments on the finance lease total $20,400,000 and are scheduled to be paid in 2022, with amounts representing interest of $206,000 over the term of the lease.