Leases

9 Months Ended

Sep. 30, 2019

Note 5 — Leases

We charter vessels and lease facilities and equipment under non-cancelable contracts that expire on various dates through 2031. We also sublease some of our facilities under non-cancelable sublease agreements.

Leases with a term greater than one year are recognized on our balance sheet as ROU assets and lease liabilities. We have elected to not recognize on our balance sheet leases with an initial term of one year or less. Lease liabilities and their corresponding ROU assets are recorded at the commencement date based on the present value of lease payments over the expected lease term. We use our incremental borrowing rate, which would be the rate incurred to borrow on a collateralized basis over a similar term in a similar economic environment, to calculate the present value of lease payments. ROU assets are adjusted for any initial direct costs paid or incentives received.

We separate our long-term vessel charters between their lease components and non-lease services. We estimate the lease component using the residual estimate approach by estimating the non-lease services, which are primarily crew, repair and maintenance, and regulatory certification costs. For all other leases, we have not separated the lease components and non-lease services. The lease term may include options to extend or terminate the lease when it is reasonably certain that we will exercise the option.

We recognize operating lease cost on a straight-line basis over the lease term for both (i) leases that are recognized on the balance sheet and (ii) short-term leases. We recognize lease cost related to variable lease payments that are not recognized on the balance sheet in the period in which the obligation is incurred. The following table details the components of our lease cost (in thousands):



	Three Months Ended			Nine Months Ended
	September 30, 2019			September 30, 2019

Operating lease cost	$	18,002		$	54,191
Variable lease cost	3,630			9,927
Short-term lease cost	5,587			14,549
Sublease income	(351		)	(1,077		)
Net lease cost	$	26,868		$	77,590

Maturities of our operating lease liabilities as of September 30, 2019 are as follows (in thousands):



	Vessels			Facilities and Equipment			Total

Remainder of 2019	$	15,416		$	1,717		$	17,133
2020	59,942			6,391			66,333
2021	54,481			5,694			60,175
2022	52,105			5,103			57,208
2023	34,580			4,522			39,102
Thereafter	2,470			10,163			12,633
Total lease payments	$	218,994		$	33,590		$	252,584
Less: imputed interest	(28,272		)	(6,711		)	(34,983		)
Total operating lease liabilities	$	190,722		$	26,879		$	217,601

Current operating lease liabilities	$	47,914		$	4,926		$	52,840
Non-current operating lease liabilities	142,808			21,953			164,761
Total operating lease liabilities	$	190,722		$	26,879		$	217,601

The following table presents the weighted average remaining lease term and discount rate:



	September 30, 2019

Weighted average remaining lease term	4.2 years
Weighted average discount rate	7.54	%

The following table presents other information related to our operating leases (in thousands):



	Nine Months Ended
	September 30, 2019

Cash paid for operating lease liabilities	$	54,538
ROU assets obtained in exchange for new operating lease obligations	921

As previously disclosed in our 2018 Form 10-K and under the previous lease accounting standard, future minimum lease payments for our operating leases as of December 31, 2018 were as follows (in thousands):



	Vessels		Facilities and Equipment		Total

2019	$	116,620	$	5,881	$	122,501
2020	96,800		5,340		102,140
2021	89,216		5,185		94,401
2022	90,371		5,064		95,435
2023	51,266		4,533		55,799
Thereafter	—		10,448		10,448
Total lease payments	$	444,273	$	36,451	$	480,724