Leases, Right-of-Use Assets and Related Liabilities

9 Months Ended

Sep. 30, 2023

Leases [Abstract]

Leases, Right-of-Use Assets and Related Liabilities

8. 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, and an operating lease contract for additional office space in Albuquerque, New Mexico, which expires in 2025. These leases contain options to extend the leases, which management does not reasonably expect to exercise, so they are not included in the length of the terms. 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):

	Nine Months Ended September 30,
	2023			2022
Other Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	22		$	29
Operating cash flows from operating leases	$	236		$	625
Finance cash flows from finance leases	$	2		$	2
Right-of-use asset obtained in exchange for new operating lease liabilities	$	199		$	—
Weighted-average remaining lease term, finance lease (months)		309			310
Weighted-average remaining lease term, operating leases (months)		65			61
Weighted-average discount rate - finance leases (1)		12	%		11	%
Weighted-average discount rate - operating leases (1)		6	%		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)	$	325	$	22
2024		386		30
2025		398		25
2026		367		25
2027		335		26
2028 and thereafter		344		549
Total		2,155		677
Less: amounts representing present value discounts		258		450
Total lease liabilities		1,897		227
Less: current portion		521		28
Non-current portion	$	1,376	$	199

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, and an operating lease contract for additional office space in Albuquerque, New Mexico, which expires in 2025. These leases contain options to extend the leases, which management does not reasonably expect to exercise, so they are not included in the length of the terms. 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):

	Nine Months Ended September 30,
	2023			2022
Other Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	22		$	29
Operating cash flows from operating leases	$	236		$	625
Finance cash flows from finance leases	$	2		$	2
Right-of-use asset obtained in exchange for new operating lease liabilities	$	199		$	—
Weighted-average remaining lease term, finance lease (months)		309			310
Weighted-average remaining lease term, operating leases (months)		65			61
Weighted-average discount rate - finance leases (1)		12	%		11	%
Weighted-average discount rate - operating leases (1)		6	%		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)	$	325	$	22
2024		386		30
2025		398		25
2026		367		25
2027		335		26
2028 and thereafter		344		549
Total		2,155		677
Less: amounts representing present value discounts		258		450
Total lease liabilities		1,897		227
Less: current portion		521		28
Non-current portion	$	1,376	$	199