4. LEASES

Adoption of Accounting Standards Codification 842, Leases

On January 1, 2019 (Predecessor), the Company adopted ASC 842 using the modified retrospective approach as of the adoption date. Reporting periods beginning after January 1, 2019 are presented under ASC 842, while prior period amounts are not adjusted and continue to be reported under the accounting standards in effect for those periods. The table below details the impact of adoption on the Company’s unaudited condensed consolidated balance sheet as of January 1, 2019 (Predecessor) (in thousands):


	Predecessor
	December 31, 2018		Impact of adoption of ASC 842		January 1, 2019
Other noncurrent assets:
Operating lease right of use assets	$	—	$	5,462	$	5,462

Current liabilities:
Accounts payable and accrued liabilities	$	157,848	$	(85)	$	157,763
Operating lease liabilities		—		2,103		2,103
Other noncurrent liabilities:
Operating lease liabilities		—		3,444		3,444

Practical Expedients

The Company elected the following practical expedients for transition to, and ongoing accounting under, ASC 842: (i) the Company does not separate lease and non-lease components of a contract, (ii) the Company does not reassess whether expired or existing contracts contain leases, nor does it reassess the lease classification for expired or existing leases and does not reassess whether previously capitalized initial direct costs would qualify for capitalization under ASC 842, (iii) the Company applies a single discount rate to a portfolio of leases with reasonably similar characteristics and iv) the Company does not assess whether existing or expired land easements that were not previously accounted for as leases are or contain a lease under ASC 842.

Leases

The Company leases equipment and office space under operating leases. The Company has no leases that meet the criteria for classification as a finance lease. The operating leases have initial lease terms ranging from 2 to 5 years for the period from October 2, 2019 through December 31, 2019 (Successor) and 1 to 4 years for the period from January 1, 2019 through October 1, 2019 (Predecessor). Payments due under the lease contracts include fixed payments plus, in some instances, variable payments. The table below summarizes the Company’s leases for the period of October 2, 2019 through December 31, 2019 (Successor) and the period of January 1, 2019 through October 1, 2019 (Predecessor) (in thousands, except years and discount rate):


	Successor			Predecessor
	Period from			Period from
	October 2, 2019			January 1, 2019
	through			through
	December 31, 2019			October 1, 2019
Lease cost
Operating lease costs	$	260		$	1,932
Short-term lease costs		4,408			12,262
Variable lease costs		215			1,210
Total lease costs	$	4,883		$	15,404

Other information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	254		$	1,936
Right-of-use assets obtained in exchange for new operating lease liabilities		3,394			5,462
Weighted-average remaining lease term - operating leases		3.5	years		3.7	years
Weighted-average discount rate - operating leases		3.70	%		4.83	%

Refer to Note 3, “Fresh-start Accounting,” for a discussion of the valuation approach used to record the right of use asset at fair value as of October 1, 2019.

Future minimum lease payments associated with the Company’s non-cancellable operating leases for office space and equipment as of December 31, 2019 (Successor), are presented in the table below (in thousands):


	Successor
	December 31, 2019
2020	$	1,022
2021		876
2022		574
2023		585
2024		345
Thereafter		—
Total operating lease payments		3,402
Less: discount to present value		232
Total operating lease liabilities		3,170
Less: current operating lease liabilities		923
Noncurrent operating lease liabilities	$	2,247

Prior to the adoption of ASC 842, future obligations, including variable nonlease components, associated with the Company’s non-cancellable operating leases for office space and equipment as of December 31, 2018 (Predecessor), are presented in the table below (in thousands):


	Predecessor
	December 31, 2018
2019	$	3,792
2020		2,350
2021		1,899
2022		968
2023		999
Thereafter		599
Total operating lease payments	$	10,607