Leases

6 Months Ended

Jun. 30, 2019

Our operating lease activities consist of leases for office space. Our finance lease activities consist of leases for vehicles. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Most leases include one or more options to renew, with renewal terms generally ranging from one to three years. The exercise of lease renewal options is at our sole discretion. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements is limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. None of our lease agreements include variable lease payments. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. See discussion of the January 1, 2019 implementation impact at Note 1. Basis of Presentation and Summary of Significant Accounting Policies.

Supplemental balance sheet information as of June 30, 2019 for our leases is as follows (in thousands):



Leases	Balance Sheet Location
Assets
Noncurrent:
Operating	Operating lease right-of-use assets	$	870
Finance	Office and other equipment, net of accumulated depreciation and amortization	703
Total lease assets		$	1,573

Liabilities
Current:
Operating	Operating lease liabilities	$	507
Finance	Finance lease liabilities	318
Noncurrent:
Operating	Operating lease liabilities	394
Finance	Finance lease liabilities	160
Total lease liabilities		$	1,379

*The difference between assets and liabilities includes a $0.1 million adjustment to NCI and a $0.07 million adjustment to accumulated deficit, both at the beginning of the period as part of the ASC 842 implementation adjustment.

Our operating lease expenses for the three and six months ended June 30, 2019 were $0.2 million and $0.4 million, respectively, and are included in General and administrative expense in our Condensed Consolidated Statements of Operations. Our finance lease expenses for the three and six months ended June 30, 2019 were $0.1 million and $0.2 million, respectively, and are included in depreciation, depletion and amortization expense and interest expense, net in our Condensed Consolidated Statements of Operations. Additionally, we capitalized as part of oil and gas properties $2.0 million and $4.1 million of short-term lease costs related to drilling rig contracts during the three and six months ended June 30, 2019. All of our drilling rig contracts have enforceable terms of less than one year.

Minimum contractual obligations for our leases (undiscounted) as of June 30, 2019 are as follows (in thousands):



	Operating			Finance
2019 (excluding six months ended June 30, 2019)	$	414		$	188
2020	206			232
2021	215			84
2022	110			5
2023	—			—
Thereafter	—			—
Total lease payments	$	945		$	509
Less imputed interest	(44		)	(31		)
Total lease liability	$	901		$	478

Cash payments for our operating leases were $0.2 million and $0.4 million, respectively, for the three and six months ended June 30, 2019. Cash payments for our finance leases were $0.1 million and $0.2 million, respectively, for the three and six months ended June 30, 2019. There were no right-of-use assets obtained in exchange for lease obligations for our operating leases for the three months ended June 30, 2019. For the six months ended June 30, 2019 there were $0.6 million of right-of-use assets obtained in exchange for lease obligations for our operating leases. The amounts related to our finance leases were not material to our consolidated financial statements.

As of June 30, 2019, the weighted average remaining lease terms of our operating and finance leases were 2.1 years and 1.7 years, respectively. The weighted average discount rates used to determine the lease liabilities as of June 30, 2019 for our operating and finance leases were 4.35% and 6.91%, respectively. The discount rate used for operating leases is based on the Company's incremental borrowing rate. The discount rate used for finance leases is based on the rates implicit in the leases.

In July 2019, our corporate office lease was extended through December 2025 which is expected to increase operating lease right-of-use assets and operating lease liabilities by approximately $2.4 million. The lease extension commences on January 1, 2020.

Leases

Supplemental balance sheet information as of June 30, 2019 for our leases is as follows (in thousands):



Leases	Balance Sheet Location
Assets
Noncurrent:
Operating	Operating lease right-of-use assets	$	870
Finance	Office and other equipment, net of accumulated depreciation and amortization	703
Total lease assets		$	1,573

Liabilities
Current:
Operating	Operating lease liabilities	$	507
Finance	Finance lease liabilities	318
Noncurrent:
Operating	Operating lease liabilities	394
Finance	Finance lease liabilities	160
Total lease liabilities		$	1,379

Minimum contractual obligations for our leases (undiscounted) as of June 30, 2019 are as follows (in thousands):



	Operating			Finance
2019 (excluding six months ended June 30, 2019)	$	414		$	188
2020	206			232
2021	215			84
2022	110			5
2023	—			—
Thereafter	—			—
Total lease payments	$	945		$	509
Less imputed interest	(44		)	(31		)
Total lease liability	$	901		$	478