Leases, Right-of-Use Assets and Related Liabilities

6 Months Ended

Jun. 30, 2023

Leases [Abstract]

Leases, Right-of-Use Assets and Related Liabilities

7. 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):

	Six Months Ended June 30,
	2023			2022
Other Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	22		$	20
Operating cash flows from operating leases	$	41		$	408
Finance cash flows from finance leases	$	2		$	2
Weighted-average remaining lease term, finance lease (months)		312			311
Weighted-average remaining lease term, operating leases (months)		58			63
Weighted-average discount rate - finance leases (1)		12	%		12	%
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)	$	380	$	26
2024		306		27
2025		315		25
2026		325		25
2027		335		26
2028 and thereafter		344		548
Total		2,005		677
Less: amounts representing present value discounts		244		457
Total lease liabilities		1,761		220
Less: current portion		454		27
Non-current portion	$	1,307	$	193

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):

	Six Months Ended June 30,
	2023			2022
Other Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	22		$	20
Operating cash flows from operating leases	$	41		$	408
Finance cash flows from finance leases	$	2		$	2
Weighted-average remaining lease term, finance lease (months)		312			311
Weighted-average remaining lease term, operating leases (months)		58			63
Weighted-average discount rate - finance leases (1)		12	%		12	%
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)	$	380	$	26
2024		306		27
2025		315		25
2026		325		25
2027		335		26
2028 and thereafter		344		548
Total		2,005		677
Less: amounts representing present value discounts		244		457
Total lease liabilities		1,761		220
Less: current portion		454		27
Non-current portion	$	1,307	$	193