Leases, Right-of-Use Assets and Related Liabilities

3 Months Ended

Mar. 31, 2023

Leases [Abstract]

Leases, Right-of-Use Assets and Related Liabilities

Leases, Right-of-Use Assets and Related Liabilities

The Company is party to an operating lease contract for the Company’s office and research facility in Englewood, Colorado, which expires in January 2029. The lease contains an option to extend the lease which management does not reasonably expect to exercise, so it is not included in the length of the term. The Company also has one production line piece of equipment with an operating lease that expires in 2024.

The Company has four finance leases for land under arrangements related to NW Iowa RNG. Under these contracts, the Company leases land from dairy farmers on which it has built three anaerobic digesters, and related equipment and pipelines to condition raw biogas from cow manure provided by the farmers. The partially conditioned biogas is transported from the three digester sites to a central gas upgrade system located at the fourth site that upgrades the biogas to pipeline-quality RNG for sale. These leases expire at various dates between 2031 and 2050.

The following tables present the (i) other quantitative information and (ii) future minimum payments under non-cancelable financing and operating leases as they relate to the Company’s leases (in thousands, except for weighted averages):

	Three Months Ended March 31,
	2023		2022
Other Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	23	$	1
Operating cash flows from operating leases	$	74	$	287
Finance cash flows from finance leases	$	2	$	1
Weighted-average remaining lease term, finance lease (months)	308		314
Weighted-average remaining lease term, operating leases (months)	61		68
Weighted-average discount rate - finance leases (1)	12%		11%
Weighted-average discount rate - operating leases (1)	5%		5%

(1)Our leases do not provide an implicit interest rate; we calculate the lease liability at lease commencement as the present value of unpaid lease payments using our estimated incremental borrowing rate. The incremental borrowing rate represents the rate of interest that we would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term and is determined using a portfolio approach based on information available at the commencement date of the lease.

Year Ending December 31,	Operating Leases		Finance Leases
2023 (remaining)	$	454	$	30
2024	305		31
2025	315		25
2026	324		25
2027	334		25
2028 and thereafter	373		571
Total	2,105		707
Less: amounts representing present value discounts	(292)		(464)
Total lease liabilities	1,813		243
Less: current portion	(421)		(59)
Non-current portion	$	1,392	$	184

Leases, Right-of-Use Assets and Related Liabilities

Leases, Right-of-Use Assets and Related Liabilities

The Company is party to an operating lease contract for the Company’s office and research facility in Englewood, Colorado, which expires in January 2029. The lease contains an option to extend the lease which management does not reasonably expect to exercise, so it is not included in the length of the term. The Company also has one production line piece of equipment with an operating lease that expires in 2024.

The Company has four finance leases for land under arrangements related to NW Iowa RNG. Under these contracts, the Company leases land from dairy farmers on which it has built three anaerobic digesters, and related equipment and pipelines to condition raw biogas from cow manure provided by the farmers. The partially conditioned biogas is transported from the three digester sites to a central gas upgrade system located at the fourth site that upgrades the biogas to pipeline-quality RNG for sale. These leases expire at various dates between 2031 and 2050.

The following tables present the (i) other quantitative information and (ii) future minimum payments under non-cancelable financing and operating leases as they relate to the Company’s leases (in thousands, except for weighted averages):

	Three Months Ended March 31,
	2023		2022
Other Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	23	$	1
Operating cash flows from operating leases	$	74	$	287
Finance cash flows from finance leases	$	2	$	1
Weighted-average remaining lease term, finance lease (months)	308		314
Weighted-average remaining lease term, operating leases (months)	61		68
Weighted-average discount rate - finance leases (1)	12%		11%
Weighted-average discount rate - operating leases (1)	5%		5%

(1)Our leases do not provide an implicit interest rate; we calculate the lease liability at lease commencement as the present value of unpaid lease payments using our estimated incremental borrowing rate. The incremental borrowing rate represents the rate of interest that we would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term and is determined using a portfolio approach based on information available at the commencement date of the lease.

Year Ending December 31,	Operating Leases		Finance Leases
2023 (remaining)	$	454	$	30
2024	305		31
2025	315		25
2026	324		25
2027	334		25
2028 and thereafter	373		571
Total	2,105		707
Less: amounts representing present value discounts	(292)		(464)
Total lease liabilities	1,813		243
Less: current portion	(421)		(59)
Non-current portion	$	1,392	$	184