Leases

9 Months Ended

Sep. 30, 2023

Leases [Abstract]

Leases

Leases

Lessee

Balance sheet information related to right-of-use (“ROU”) assets and lease liabilities was as follows:

(In millions)	Balance Sheet Location:	September 30, 2023		December 31, 2022
ROU assets:
Operating leases	Other noncurrent assets	$	93	$	123
Finance leases	Other noncurrent assets	20		24
Total ROU assets		$	113	$	147
Lease liabilities:
Current liabilities
Operating leases	Other current liabilities	$	63	$	94
Finance leases	Other current liabilities	7		6
Noncurrent liabilities
Operating leases	Deferred credits and other liabilities	35		32
Finance leases	Deferred credits and other liabilities	13		18
Total lease liabilities		$	118	$	150

Operating Leases

We enter into various lease agreements to support our operations including drilling rigs, compressors, buildings, vessels, vehicles and miscellaneous field equipment. We primarily act as a lessee in these transactions and the majority of our existing leases are classified as either short-term or long-term operating leases.

Finance Leases

In 2018, we signed an agreement with an owner/lessor to construct and lease a new build-to-suit office building in Houston, Texas. The initial lease term is five years and commenced in late September 2021 after the new Houston office was ready for occupancy. In March 2022, we made our first cash lease payment. During the nine months ended September 30, 2023 and 2022, we have made cash lease payments totaling approximately $16 million and $6 million, respectively. At the end of the initial lease term, we can negotiate to extend the lease term for an additional five years, subject to the approval of the participants; purchase the property subject to certain terms and conditions; or remarket the property to an unrelated third party. The lease contains a residual value guarantee of 100% of the total acquisition and construction costs.

Lessor

Our wholly owned subsidiary, Marathon E.G. Production Limited, is a lessor for residential housing in E.G., which is occupied by EGHoldings, a related party equity method investee – see Note 20. The lease was classified as an operating lease and expires in 2024, with a lessee option to extend through 2034. Lease payments are fixed for the entire duration of the agreement at approximately $6 million per year. Our lease income is reported in other income in our consolidated statements of income for all periods presented. The undiscounted cash flows to be received under this lease agreement are summarized below.

(In millions)	Operating Lease Future Cash Receipts
2023	$	2
2024	6
2025	6
2026	6
2027	6
Thereafter	42
Total undiscounted cash flows	$	68

Leases

Leases

Lessee

Balance sheet information related to right-of-use (“ROU”) assets and lease liabilities was as follows:

(In millions)	Balance Sheet Location:	September 30, 2023		December 31, 2022
ROU assets:
Operating leases	Other noncurrent assets	$	93	$	123
Finance leases	Other noncurrent assets	20		24
Total ROU assets		$	113	$	147
Lease liabilities:
Current liabilities
Operating leases	Other current liabilities	$	63	$	94
Finance leases	Other current liabilities	7		6
Noncurrent liabilities
Operating leases	Deferred credits and other liabilities	35		32
Finance leases	Deferred credits and other liabilities	13		18
Total lease liabilities		$	118	$	150

Operating Leases

We enter into various lease agreements to support our operations including drilling rigs, compressors, buildings, vessels, vehicles and miscellaneous field equipment. We primarily act as a lessee in these transactions and the majority of our existing leases are classified as either short-term or long-term operating leases.

Finance Leases

In 2018, we signed an agreement with an owner/lessor to construct and lease a new build-to-suit office building in Houston, Texas. The initial lease term is five years and commenced in late September 2021 after the new Houston office was ready for occupancy. In March 2022, we made our first cash lease payment. During the nine months ended September 30, 2023 and 2022, we have made cash lease payments totaling approximately $16 million and $6 million, respectively. At the end of the initial lease term, we can negotiate to extend the lease term for an additional five years, subject to the approval of the participants; purchase the property subject to certain terms and conditions; or remarket the property to an unrelated third party. The lease contains a residual value guarantee of 100% of the total acquisition and construction costs.

Lessor

Our wholly owned subsidiary, Marathon E.G. Production Limited, is a lessor for residential housing in E.G., which is occupied by EGHoldings, a related party equity method investee – see Note 20. The lease was classified as an operating lease and expires in 2024, with a lessee option to extend through 2034. Lease payments are fixed for the entire duration of the agreement at approximately $6 million per year. Our lease income is reported in other income in our consolidated statements of income for all periods presented. The undiscounted cash flows to be received under this lease agreement are summarized below.

(In millions)	Operating Lease Future Cash Receipts
2023	$	2
2024	6
2025	6
2026	6
2027	6
Thereafter	42
Total undiscounted cash flows	$	68

Leases

Leases

Lessee

Balance sheet information related to right-of-use (“ROU”) assets and lease liabilities was as follows:

(In millions)	Balance Sheet Location:	September 30, 2023		December 31, 2022
ROU assets:
Operating leases	Other noncurrent assets	$	93	$	123
Finance leases	Other noncurrent assets	20		24
Total ROU assets		$	113	$	147
Lease liabilities:
Current liabilities
Operating leases	Other current liabilities	$	63	$	94
Finance leases	Other current liabilities	7		6
Noncurrent liabilities
Operating leases	Deferred credits and other liabilities	35		32
Finance leases	Deferred credits and other liabilities	13		18
Total lease liabilities		$	118	$	150

Operating Leases

We enter into various lease agreements to support our operations including drilling rigs, compressors, buildings, vessels, vehicles and miscellaneous field equipment. We primarily act as a lessee in these transactions and the majority of our existing leases are classified as either short-term or long-term operating leases.

Finance Leases

In 2018, we signed an agreement with an owner/lessor to construct and lease a new build-to-suit office building in Houston, Texas. The initial lease term is five years and commenced in late September 2021 after the new Houston office was ready for occupancy. In March 2022, we made our first cash lease payment. During the nine months ended September 30, 2023 and 2022, we have made cash lease payments totaling approximately $16 million and $6 million, respectively. At the end of the initial lease term, we can negotiate to extend the lease term for an additional five years, subject to the approval of the participants; purchase the property subject to certain terms and conditions; or remarket the property to an unrelated third party. The lease contains a residual value guarantee of 100% of the total acquisition and construction costs.

Lessor

Our wholly owned subsidiary, Marathon E.G. Production Limited, is a lessor for residential housing in E.G., which is occupied by EGHoldings, a related party equity method investee – see Note 20. The lease was classified as an operating lease and expires in 2024, with a lessee option to extend through 2034. Lease payments are fixed for the entire duration of the agreement at approximately $6 million per year. Our lease income is reported in other income in our consolidated statements of income for all periods presented. The undiscounted cash flows to be received under this lease agreement are summarized below.

(In millions)	Operating Lease Future Cash Receipts
2023	$	2
2024	6
2025	6
2026	6
2027	6
Thereafter	42
Total undiscounted cash flows	$	68