LEASES

We are a lessee through noncancellable lease agreements for property and equipment consisting primarily of buildings, land, vehicles, and equipment used in both our operations and administrative functions. We recognize a lease liability with an offsetting right-of-use asset in our Condensed Consolidated Balance Sheet for operating leases based on the present value of the future lease payments. As an accounting policy, we have elected to combine lease and non-lease components for all classes of leased assets in our calculation of the lease liability and the offsetting right-of-use asset.

Our lease agreements require both fixed and variable periodic payments, with initial terms typically ranging from one to 15 years, but a certain land lease has a term of 108 years. Payment provisions in certain of our lease agreements contain escalation factors which may be based on stated rates or a change in a published index at a future time. The amount by which a lease escalates based on the change in a published index, which is not known at lease commencement, is considered a variable payment and is not included in the present value of the future lease payments, which only includes those that are stated or can be calculated based on the lease agreement at lease commencement. In addition to the noncancellable periods, many of our lease agreements provide for one or more extensions of the lease agreement for periods ranging from one year in length to an indefinite number of times following the specified contract term. Other lease agreements provide for extension terms that allow us to utilize the identified leased asset for an indefinite period of time so long as the asset continues to be utilized in our operations. In consideration of these renewal features, we assess the term of the lease agreements, which includes using judgment in the determination of which renewal periods and termination provisions, when at our sole election, will be reasonably certain of being exercised. Periods after the initial term or extension terms that allow for either party to the lease to cancel the lease are not considered in the assessment of the lease term. Additionally, we have elected to exclude leases with an original term of one year or less, including renewal periods, from the calculation of the lease liability and the offsetting right-of-use asset.

We used judgment in determining the discount rate upon which the present value of the future lease payments is determined. This rate is based on a collateralized interest rate corresponding to the term of the lease agreement using company, industry, and market information available.



	Three Months Ended March 31, 2019
	(Thousands)
Lease Cost:
Operating lease cost	$	2,502
Short-term lease cost	—
Variable lease cost	1,392
Total lease cost	$	3,894

Cash paid for amounts included in the measurement of operating lease liabilities	$	2,388

	March 31, 2019
	(Thousands)
Other Information:
Right-of-use assets	$	89,824
Operating lease liabilities:
Current (included in Accrued liabilities in our Condensed Consolidated Balance Sheet)	$	3,482
Lease liability	$	85,759
Weighted-average remaining lease term - operating leases (years)	15
Weighted-average discount rate - operating leases	5		%

As of March 31, 2019, the following table represents our operating lease maturities, including renewal provisions that we have assessed as being reasonably certain of exercise, for each of the years ended December 31:



	(Thousands)
2019 (remainder)	$	6,540
2020	7,367
2021	9,448
2022	9,431
2023	9,435
Thereafter	86,075
Total future lease payments	128,296
Less amount representing interest	39,055
Total obligations under operating leases	$	89,241