Leases

12 Months Ended

Dec. 31, 2019

The Company’s operating lease activities consist of leases for office space. The Company’s 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 the Company’s 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 the lease agreements include variable lease payments. The 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 2. Summary of Significant Accounting Policies.

Supplemental balance sheet information as of December 31, 2019 for the Company’s leases is as follows (in thousands):



Leases	Balance Sheet Location
Assets
Noncurrent:
Operating	Operating lease right-of-use assets	$	3,108
Finance	Office and other equipment, net of accumulated depreciation and amortization	614
Total lease assets		$	3,722

Liabilities
Current:
Operating	Operating lease liabilities	$	570
Finance	Finance lease liabilities	206
Noncurrent:
Operating	Operating lease liabilities	2,539
Finance	Finance lease liabilities	85
Total lease liabilities		$	3,400

*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.

Operating lease expenses for the year ended December 31, 2019 were $0.8 million and are included in General and administrative expense in the Consolidated Statements of Operations. Finance lease expenses for the year ended December 31, 2019 were $0.3 million and are included in depreciation, depletion and amortization expense and interest expense, net in the Consolidated Statements of Operations. Additionally, the Company capitalized as part of oil and gas properties $11.4 million of short-term lease costs related to drilling rig contracts during the year ended December 31, 2019. All of the Company’s drilling rig contracts have enforceable terms of less than one year.

Minimum contractual obligations for the Company’s leases (undiscounted) as of December 31, 2019 were as follows (in thousands):



	Operating			Finance
2020	$	632		$	219
2021	791			84
2022	696			5
2023	596			—
2024	605			—
Thereafter	152			—
Total lease payments	$	3,472		$	308
Less imputed interest	(363		)	(17		)
Total lease liability	$	3,109		$	291

Cash payments for the Company’s operating and finance leases for the year ended December 31, 2019 were $0.8 million and $0.4 million, respectively. For the year ended December 31, 2019, there were $3.2 million of right-of-use assets obtained in exchange for lease obligations for operating leases. The amounts related to the Company’s finance leases were not material to the consolidated financial statements.

As of December 31, 2019, the weighted average remaining lease terms of the Company’s operating and finance leases were 4.8 years and 1.4 years, respectively. The weighted average discount rates used to determine the lease liabilities as of December 31, 2019 for the Company’s operating and finance leases were 4.35% and 6.75%, 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.

As of December 31, 2018, minimum future contractual payments for long-term leases under ASC 840 were as follows (in thousands):



	Operating		Finance
2019	$	723	$	419
2020	—		223
2021	—		77
2022	—		—
2023	—		—
Thereafter	—		—
Total lease payments	$	723	$	719

Leases

Supplemental balance sheet information as of December 31, 2019 for the Company’s leases is as follows (in thousands):



Leases	Balance Sheet Location
Assets
Noncurrent:
Operating	Operating lease right-of-use assets	$	3,108
Finance	Office and other equipment, net of accumulated depreciation and amortization	614
Total lease assets		$	3,722

Liabilities
Current:
Operating	Operating lease liabilities	$	570
Finance	Finance lease liabilities	206
Noncurrent:
Operating	Operating lease liabilities	2,539
Finance	Finance lease liabilities	85
Total lease liabilities		$	3,400

Minimum contractual obligations for the Company’s leases (undiscounted) as of December 31, 2019 were as follows (in thousands):



	Operating			Finance
2020	$	632		$	219
2021	791			84
2022	696			5
2023	596			—
2024	605			—
Thereafter	152			—
Total lease payments	$	3,472		$	308
Less imputed interest	(363		)	(17		)
Total lease liability	$	3,109		$	291

As of December 31, 2018, minimum future contractual payments for long-term leases under ASC 840 were as follows (in thousands):



	Operating		Finance
2019	$	723	$	419
2020	—		223
2021	—		77
2022	—		—
2023	—		—
Thereafter	—		—
Total lease payments	$	723	$	719