Leases Operating and Financing Leases (Notes)

12 Months Ended

Dec. 31, 2021

Leases [Abstract]

Leases

NOTE 11 - LEASES

We have operating leases for office space and well equipment, and finance leases for vehicles. Our leases have remaining lease terms ranging from one to five years. The vehicle leases include an option to renew on a month-to-month basis after the primary term. Lease payments associated with vehicle leases also include a contractually stated residual value guarantee.

The following table presents the components of lease costs for the periods presented:

	Year Ended December 31,
	2021		2020
	(in thousands)
Operating lease costs (1)	$	6,125	$	7,983
Finance lease costs:
Amortization of ROU assets	1,752		1,812
Interest on lease liabilities	164		179
Total finance lease costs	1,916		1,991
Short-term lease costs (1)	203,361		193,756
Total lease costs	$	211,402	$	203,730

_______________

(1)The majority of our operating leases relate to the operation or completion of our wells. Therefore, the lease costs presented in the table above represent the total gross costs we incur, which are not comparable to our net costs recorded to the consolidated statements of operations, consolidated statements of cash flows or capitalized in the consolidated balance sheets, as amounts therein are reflected net of amounts billed to working interest partners.

Our operating lease costs are recorded in lease operating expenses or general and administrative expense and our finance lease costs are recorded in DD&A expense and interest expense. Our short-term lease costs include amounts that are capitalized as part of the cost of assets and are recorded as properties and equipment or recognized as expense.

The following table presents the balance sheet classification and other information regarding our leases as of the dates indicated:

		December 31,
	Consolidated Balance Sheet Line Item	2021			2020
		(in thousands)
Operating lease ROU assets	Other assets	$	7,630		$	11,722
Finance lease ROU assets	Properties and equipment, net	$	3,483		$	3,189
Total ROU assets		$	11,113		$	14,911
Operating lease obligation - short-term	Other accrued expenses	5,937			6,520
Operating lease obligation - long-term	Other liabilities	4,044			9,061
Finance lease obligation - short-term	Other accrued expenses	1,260			1,466
Finance lease obligation - long-term	Other liabilities	2,230			1,702
Total lease liabilities		$	13,471		$	18,749
Weighted average remaining lease term (years)		2.8			3.0
Weighted average discount rate		4.8		%	4.8		%

Maturity of lease liabilities by year and in the aggregate, under operating and financing leases with terms of one year or more, as of December 31, 2021 consist of the following: 

	Operating Leases		Finance Leases		Total
	(in thousands)
2022	$	6,214	$	1,378	$	7,592
2023	1,767		1,119		2,886
2024	950		612		1,562
2025	950		473		1,423
2026	747		148		895
Total lease payments	10,628		3,730		14,358
Less: Interest and discount	(647)		(240)		(887)
Present value of lease liabilities	$	9,981	$	3,490	$	13,471

In January 2022, we entered into a 11-year lease agreement for an office space expected to commence in March 2022 with aggregate lease payments of approximately $32 million.

Leases

NOTE 11 - LEASES

We have operating leases for office space and well equipment, and finance leases for vehicles. Our leases have remaining lease terms ranging from one to five years. The vehicle leases include an option to renew on a month-to-month basis after the primary term. Lease payments associated with vehicle leases also include a contractually stated residual value guarantee.

The following table presents the components of lease costs for the periods presented:

	Year Ended December 31,
	2021		2020
	(in thousands)
Operating lease costs (1)	$	6,125	$	7,983
Finance lease costs:
Amortization of ROU assets	1,752		1,812
Interest on lease liabilities	164		179
Total finance lease costs	1,916		1,991
Short-term lease costs (1)	203,361		193,756
Total lease costs	$	211,402	$	203,730

_______________

(1)The majority of our operating leases relate to the operation or completion of our wells. Therefore, the lease costs presented in the table above represent the total gross costs we incur, which are not comparable to our net costs recorded to the consolidated statements of operations, consolidated statements of cash flows or capitalized in the consolidated balance sheets, as amounts therein are reflected net of amounts billed to working interest partners.

Our operating lease costs are recorded in lease operating expenses or general and administrative expense and our finance lease costs are recorded in DD&A expense and interest expense. Our short-term lease costs include amounts that are capitalized as part of the cost of assets and are recorded as properties and equipment or recognized as expense.

The following table presents the balance sheet classification and other information regarding our leases as of the dates indicated:

		December 31,
	Consolidated Balance Sheet Line Item	2021			2020
		(in thousands)
Operating lease ROU assets	Other assets	$	7,630		$	11,722
Finance lease ROU assets	Properties and equipment, net	$	3,483		$	3,189
Total ROU assets		$	11,113		$	14,911
Operating lease obligation - short-term	Other accrued expenses	5,937			6,520
Operating lease obligation - long-term	Other liabilities	4,044			9,061
Finance lease obligation - short-term	Other accrued expenses	1,260			1,466
Finance lease obligation - long-term	Other liabilities	2,230			1,702
Total lease liabilities		$	13,471		$	18,749
Weighted average remaining lease term (years)		2.8			3.0
Weighted average discount rate		4.8		%	4.8		%

Maturity of lease liabilities by year and in the aggregate, under operating and financing leases with terms of one year or more, as of December 31, 2021 consist of the following: 

	Operating Leases		Finance Leases		Total
	(in thousands)
2022	$	6,214	$	1,378	$	7,592
2023	1,767		1,119		2,886
2024	950		612		1,562
2025	950		473		1,423
2026	747		148		895
Total lease payments	10,628		3,730		14,358
Less: Interest and discount	(647)		(240)		(887)
Present value of lease liabilities	$	9,981	$	3,490	$	13,471

In January 2022, we entered into a 11-year lease agreement for an office space expected to commence in March 2022 with aggregate lease payments of approximately $32 million.