Leases Operating and Financing Leases (Notes)

12 Months Ended

Dec. 31, 2022

Leases [Abstract]

Leases

NOTE 10 - 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 month to ten 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,
	2022		2021
	(in thousands)
Operating lease costs (1)	$	6,743	$	6,125
Finance lease costs:
Amortization of ROU assets	2,100		1,752
Interest on lease liabilities	270		164
Total finance lease costs	2,370		1,916
Short-term lease costs (1)	338,404		203,361
Total lease costs	$	347,517	$	211,402

_______________

(1)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,
Leases	Consolidated Balance Sheet Line Item	2022		2021
		(in thousands)
Operating lease ROU assets	Other assets	$	19,577	$	7,630
Finance lease ROU assets	Properties and equipment, net	6,184		3,483
Total ROU assets		$	25,761	$	11,113
Operating lease obligation - short-term	Other accrued expenses	$	3,825	$	5,937
Operating lease obligation - long-term	Other liabilities	37,720		4,044
Finance lease obligation - short-term	Other accrued expenses	2,162		1,260
Finance lease obligation - long-term	Other liabilities	4,095		2,230
Total lease liabilities		$	47,802	$	13,471

		December 31,
Leases	Consolidated Balance Sheet Line Item	2022		2021
		(in thousands)
Weighted average remaining lease term (years)		7.9		2.8
Weighted average discount rate		5.1	%	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, 2022 consist of the following: 

	Operating Leases		Finance Leases		Total
	(in thousands)
2023	$	4,063	$	2,404	$	6,467
2024	3,101		1,891		4,992
2025	6,682		1,698		8,380
2026	6,754		649		7,403
2027	5,821		73		5,894
Thereafter	27,512		—		27,512
Total lease payments	53,933		6,715		60,648
Less: Interest and discount	(12,388)		(458)		(12,846)
Present value of lease liabilities	$	41,545	$	6,257	$	47,802

In September 2022, we entered into a three-year drilling rig agreement with total gross lease payments of approximately $34 million which we expect to commence and be recognized on our balance sheet in the first quarter of 2023.

Leases

NOTE 10 - 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 month to ten 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,
	2022		2021
	(in thousands)
Operating lease costs (1)	$	6,743	$	6,125
Finance lease costs:
Amortization of ROU assets	2,100		1,752
Interest on lease liabilities	270		164
Total finance lease costs	2,370		1,916
Short-term lease costs (1)	338,404		203,361
Total lease costs	$	347,517	$	211,402

_______________

(1)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,
Leases	Consolidated Balance Sheet Line Item	2022		2021
		(in thousands)
Operating lease ROU assets	Other assets	$	19,577	$	7,630
Finance lease ROU assets	Properties and equipment, net	6,184		3,483
Total ROU assets		$	25,761	$	11,113
Operating lease obligation - short-term	Other accrued expenses	$	3,825	$	5,937
Operating lease obligation - long-term	Other liabilities	37,720		4,044
Finance lease obligation - short-term	Other accrued expenses	2,162		1,260
Finance lease obligation - long-term	Other liabilities	4,095		2,230
Total lease liabilities		$	47,802	$	13,471

		December 31,
Leases	Consolidated Balance Sheet Line Item	2022		2021
		(in thousands)
Weighted average remaining lease term (years)		7.9		2.8
Weighted average discount rate		5.1	%	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, 2022 consist of the following: 

	Operating Leases		Finance Leases		Total
	(in thousands)
2023	$	4,063	$	2,404	$	6,467
2024	3,101		1,891		4,992
2025	6,682		1,698		8,380
2026	6,754		649		7,403
2027	5,821		73		5,894
Thereafter	27,512		—		27,512
Total lease payments	53,933		6,715		60,648
Less: Interest and discount	(12,388)		(458)		(12,846)
Present value of lease liabilities	$	41,545	$	6,257	$	47,802

In September 2022, we entered into a three-year drilling rig agreement with total gross lease payments of approximately $34 million which we expect to commence and be recognized on our balance sheet in the first quarter of 2023.