Leases, Right-of-Use Assets and Related Liabilities

6 Months Ended

Jun. 30, 2024

Leases, Right-of-Use Assets and Related Liabilities

Leases, Right-of-Use Assets and Related Liabilities

6. Leases, Right-of-Use Assets and Related Liabilities

The Company is party to an operating lease for the Company’s office and research facility in Englewood, Colorado, which expires in January 2029, and two operating leases for additional office space in Albuquerque, New Mexico, and San Diego, California, which expire in 2025. The Company’s office facility lease contains an option to extend the lease, which management does not reasonably expect to exercise, so they are not included in the length of the terms. The additional office space leases do not contain options to extend.

The Company has four finance leases for land and one for a processing facility. The land leases are for NW Iowa RNG. The Company leases land from dairy farmers on which it has built three anaerobic digesters, and a gas upgrade facility to condition raw biogas from cow manure provided by the farmers. These leases expire at various dates between 2031 and 2050. The Company accounts for lease components separately from non-lease components for the Company’s dairy lease asset class. The total consideration in the lease agreement is allocated to the lease and non-lease components based on their relative standalone selling prices. These leases contain options to extend the leases, which management reasonably expects to exercise, and so are included in the length of the terms. The Company has entered into an agreement to use a third-party processing facility that contains an embedded lease. The agreement for the leased facility expires in 2025, with no option to extend the lease term.

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,
	2024			2023
Other Information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	255		$	22
Operating cash flows from operating leases	$	198		$	41
Finance cash flows from finance leases	$	36		$	2
Right-of-use asset obtained in exchange for new finance lease liabilities	$	2,444		$	—
Right-of-use asset obtained in exchange for new operating lease liabilities	$	32		$	—
Weighted-average remaining lease term, finance lease (months)		43			312
Weighted-average remaining lease term, operating leases (months)		51			58
Weighted-average discount rate - finance leases (1)		17	%		12	%
Weighted-average discount rate - operating leases (1)		6	%		5	%

(1) When 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
2024 (remaining)	$	210	$	983
2025		411		1,674
2026		367		26
2027		334		26
2028		344		26
2029 and thereafter		—		544
Total		1,666		3,279
Less: amounts representing present value discounts		187		769
Total lease liabilities		1,479		2,510
Less: current portion		344		1,520
Non-current portion	$	1,135	$	990