Annual report [Section 13 and 15(d), not S-K Item 405]

Leases

v3.25.0.1
Leases
12 Months Ended
Dec. 31, 2024
Leases  
Leases

10. Leases

In the normal course of business, we enter into lease agreements to support our operations. Our operating lease assets include right-of-way easements for our wells and facilities, office space and other assets. Our finance lease assets include field vehicles.

Balance Sheet Information

The following table shows the classification and location of our right-of-use assets and lease liabilities on our consolidated balance sheet:

(in thousands)

December 31, 

December 31,

2024

2023

Operating Leases

Assets

Operating Lease Right-of-Use Assets, Net

$

15,016

$

16,726

Liabilities

Accrued and Other Current Liabilities

1,568

1,676

Other Long-Term Liabilities

14,040

14,716

Finance Leases

Assets

Property, Plant and Equipment

$

2,902

$

Less: Accumulated Depreciation

(171)

Total Property, Plant and Equipment, Net

2,731

Liabilities

Accrued and Other Current Liabilities

571

Other Long-Term Liabilities

1,747

During the third quarter of 2024, we entered into an agreement to begin leasing a portion of our field vehicles, which are accounted for as finance leases and primarily have an initial term of 48 months. As of December 31, 2024, we had 54 vehicle leases.

The operating lease for our corporate office space in Houston, Texas commenced on September 30, 2023 and expires in September 2033, with options for renewal. On the commencement date, we recorded a right-of-use asset of $7.7 million, a current lease liability of $0.3 million and a noncurrent lease liability of $6.4 million.

Statement of Operations Information

The following table provides the components of lease costs recognized in our consolidated statements of operations for the periods indicated:

(in thousands)

Year Ended December 31, 

2024

    

2023

    

2022

Operating Lease Costs

Direct Operating Costs (1)

$

1,388

$

1,253

$

969

General and Administrative (1)

2,067

1,144

700

Finance Lease Costs

Amortization of right-of-use asset (2)

171

Interest on Lease Obligations (3)

40

Total Lease Cost

$

3,666

$

2,397

$

1,669

(1) Does not include short-term lease costs.
(2) Included in “Depreciation, Amortization and Accretion” in our consolidated statements of operations.
(3) Included in “Interest Expense, Net” in our consolidated statements of operations.

Short-term Leases

Our short-term lease costs, consisting primarily of field equipment rentals, totaled $12.9 million, $14.6 million and $11.1 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Cash Flow Information

The following table summarizes supplemental cash flow information related to leases:

(in thousands)

Year Ended December 31, 

2024

    

2023

    

2022

Cash Paid for Amounts Included in the Measurement of Lease Liabilities

Operating Cash Flows from Operating Leases

$

2,528

$

1,543

$

1,282

Financing Cash Flows from Finance Leases

553

Right-of-Use Assets Obtained in Exchange for Lease Liabilities, Net

Operating Leases

$

768

$

10,052

$

2,639

Finance Leases

2,902

Lease Terms and Discount Rates

The following table provides lease terms and discount rates related to leases:

December 31, 2024

December 31, 2023

Weighted Average Remaining Lease Term (Years)

Operating Leases

6.9

7.6

Finance Leases

3.7

Weighted Average Discount Rate

Operating Leases

6.42%

6.30%

Finance Leases

7.45%

Annual Lease Maturities

The following table provides maturities of lease liabilities at December 31, 2024:

(in thousands)

Operating Leases

Finance Leases

Total

2025

$

2,230

$

725

$

2,955

2026

1,961

725

2,686

2027

3,302

702

4,004

2028

2,868

508

3,376

2029

2,423

2,423

Thereafter

6,819

6,819

Total Lease Payments

19,603

2,660

22,263

Less: Interest

(3,995)

(342)

(4,337)

Present Value of Lease Liabilities

$

15,608

$

2,318

$

17,926

Subleases

During the fourth quarter of 2023, we entered into two subleases related to our previous office space in Houston, Texas. The first sublease commenced in October 2023 and expires in December 2025, with no option for renewal. The second sublease commenced in November 2023 and expires in October 2028, with no option for renewal. The subtenants are also responsible for certain operating expenses associated with the office building, including utilities, which are considered variable lease payments.

We recognized total sublease income, including variable lease payments, of $0.6 million and $0.1 million for the years ended December 31, 2024 and 2023, respectively, which is recorded as a reduction of rent expense under our head lease and is included in “General and Administrative” expense on the consolidated statements of operations.

The following table provides the sublease income we expect to recognize, excluding variable lease payments and undiscounted, as of December 31, 2024:

(in thousands)

2025

$

388

2026

287

2027

292

2028

248

Total Sublease Income

$

1,215