Note 4 - Leases

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

4. LEASES

The Company’s right-of-use assets and lease liabilities are recognized at their discounted present value under the following captions in the Consolidated Balance Sheets at December 31, 2023 and 2022:

	December 31,
	2023		2022
	(in thousands)
Right of use asset
Operating lease	$	693	$	868
Lease liability
Current lease obligation		182		189
Long-term lease obligation		611		794
	$	793	$	983

The Company recognizes lease expense on a straight-line basis excluding short-term and variable lease payments, which are recognized as incurred. Short-term lease cost represents payments for office leases with original terms less than one year. Beginning in March 2020, the Company subleased its Denver, Colorado office and recognized sublease income as a reduction of rent expense. The term of the sublease was through the term of the Company’s Denver office lease, which terminated on January 31, 2023. Following are the amounts recognized as components of rental expense for the years ended December 31, 2023 and 2022:

	December 31,
	2023		2022
	(in thousands)
Operating lease cost	$	211	$	246
Short-term lease cost		930		560
Sublease income		-		(71	)
Total lease costs	$	1,141	$	735

The Houston office operating lease commenced in May 2022 and is for a term of 67 months. The lease contains a seven-month rent abatement period. The base rent under the lease escalates $0.50 per square foot each twelve-month period during the term of the lease. In addition, the Company is responsible for its share of operating expenses and tax expenses as defined in the lease.

Short-term lease cost is associated with short-term lease agreements primarily related to compressors and field equipment rentals contracted for 12 months or less.

The Company’s Houston and Denver office operating lease agreements did not contain implicit interest rates that could be readily determined; therefore, the Company used the incremental borrowing rates in effect at the time the Company entered into the leases.

	As of December 31,
	2023			2022
Weighted average lease term (years)		3.9			4.8
Weighted average discount rate		4.25	%		4.34	%

Maturity of operating lease liabilities with terms of one year or more as of December 31, 2023 are presented in the following table:

	December 31, 2023
	(in thousands)
2024	$	213
2025		218
2026		224
2027		210
Total future lease payments	$	865
Less: imputed interest		(72	)
Total lease liability	$	793