Leases

12 Months Ended

Dec. 31, 2022

Leases [Abstract]

Leases

Leases

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.

The following table shows the classification and location of the Company’s leases on the Consolidated Balance Sheets (in thousands):

		December 31,
Leases	Balance Sheet Location	2022		2021
Assets
Noncurrent:
Operating	Operating lease right-of-use assets	$	4,569	$	1,795
Finance	Office and other equipment, net of accumulated depreciation and amortization	1,678		—
Total lease assets		$	6,247	$	1,795
Liabilities
Current:
Operating	Operating lease liabilities	$	842	$	681
Finance	Finance lease liabilities	802		—
Noncurrent:
Operating	Operating lease liabilities	3,889		1,276
Finance	Finance lease liabilities	876		—
Total lease liabilities		$	6,409	$	1,957

The following table shows the classification and location of the Company’s lease costs on the Consolidated Statements of Operations (in thousands):

		Years Ended December 31,
	Statement of Operations Location	2022		2021		2020
Operating lease expense	General and administrative expense	$	884	$	803	$	786
Finance lease expense:
Amortization of right-of-use assets	Depreciation, depletion and amortization	$	549	$	74	$	217
Interest on lease liability	Interest expense, net	100		2		13
Total lease expense		$	1,533	$	879	$	1,016

Additionally, the Company capitalized as part of oil and gas properties $23.9 million, $6.4 million and $2.9 million of short-term lease costs related to drilling rig contracts during the years ended December 31, 2022, 2021 and 2020. 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, 2022 were as follows (in thousands):

	Operating		Finance
2023	$	1,138	$	907
2024	1,160		724
2025	868		200
2026	1,052		—
2027	961		—
Thereafter	327		—
Total lease payments	$	5,506	$	1,831
Less imputed interest	(775)		(153)
Total lease liability	$	4,731	$	1,678

The following table shows the weighted average remaining lease term and the weighted average discount rate for the Company’s leases as of the dates indicated:

	December 31, 2022				December 31, 2021
	Operating Leases		Finance Leases		Operating Leases		Finance Leases
Weighted-average remaining lease term (in years)	4.1		2.3		2.9		n/a
Weighted-average discount rate (1)	6.67	%	8.00	%	4.35	%	n/a

(1)The discount rate used for operating leases is based on the Company’s incremental borrowing rate at lease commencement and may be adjusted if modifications to lease terms or lease reassessments occur. The discount rate used for finance leases is based on the rates implicit in the leases.

The following table includes other quantitative information for the Company’s leases (in thousands):

	Years Ended December 31,
	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Cash payments for operating leases	$	857	$	778
Cash payments for finance leases	$	649	$	70
Right-of-use assets obtained in exchange for new operating lease liabilities	$	3,447	$	—
Right-of-use assets obtained in exchange for new finance lease liabilities	$	2,227	$	—

Leases

Leases

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.

The following table shows the classification and location of the Company’s leases on the Consolidated Balance Sheets (in thousands):

		December 31,
Leases	Balance Sheet Location	2022		2021
Assets
Noncurrent:
Operating	Operating lease right-of-use assets	$	4,569	$	1,795
Finance	Office and other equipment, net of accumulated depreciation and amortization	1,678		—
Total lease assets		$	6,247	$	1,795
Liabilities
Current:
Operating	Operating lease liabilities	$	842	$	681
Finance	Finance lease liabilities	802		—
Noncurrent:
Operating	Operating lease liabilities	3,889		1,276
Finance	Finance lease liabilities	876		—
Total lease liabilities		$	6,409	$	1,957

The following table shows the classification and location of the Company’s lease costs on the Consolidated Statements of Operations (in thousands):

		Years Ended December 31,
	Statement of Operations Location	2022		2021		2020
Operating lease expense	General and administrative expense	$	884	$	803	$	786
Finance lease expense:
Amortization of right-of-use assets	Depreciation, depletion and amortization	$	549	$	74	$	217
Interest on lease liability	Interest expense, net	100		2		13
Total lease expense		$	1,533	$	879	$	1,016

Additionally, the Company capitalized as part of oil and gas properties $23.9 million, $6.4 million and $2.9 million of short-term lease costs related to drilling rig contracts during the years ended December 31, 2022, 2021 and 2020. 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, 2022 were as follows (in thousands):

	Operating		Finance
2023	$	1,138	$	907
2024	1,160		724
2025	868		200
2026	1,052		—
2027	961		—
Thereafter	327		—
Total lease payments	$	5,506	$	1,831
Less imputed interest	(775)		(153)
Total lease liability	$	4,731	$	1,678

The following table shows the weighted average remaining lease term and the weighted average discount rate for the Company’s leases as of the dates indicated:

	December 31, 2022				December 31, 2021
	Operating Leases		Finance Leases		Operating Leases		Finance Leases
Weighted-average remaining lease term (in years)	4.1		2.3		2.9		n/a
Weighted-average discount rate (1)	6.67	%	8.00	%	4.35	%	n/a

(1)The discount rate used for operating leases is based on the Company’s incremental borrowing rate at lease commencement and may be adjusted if modifications to lease terms or lease reassessments occur. The discount rate used for finance leases is based on the rates implicit in the leases.

The following table includes other quantitative information for the Company’s leases (in thousands):

	Years Ended December 31,
	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Cash payments for operating leases	$	857	$	778
Cash payments for finance leases	$	649	$	70
Right-of-use assets obtained in exchange for new operating lease liabilities	$	3,447	$	—
Right-of-use assets obtained in exchange for new finance lease liabilities	$	2,227	$	—