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Leases, Right-of-Use Assets and Related Liabilities
 3 Months Ended
Mar. 31, 2022
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, that 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. As of March 31, 2022, right-of-use assets under operating leases totaling $2.2 million are included in "Operating right-of use assets," and related lease liabilities totaling $2.3 million ($0.4 million in current and $1.8 million in long-term) are included in the Consolidated Balance Sheets.
The Company also 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, related equipment and pipelines to condition raw biogas from cow manure provided by the farmers. The partially conditioned biogas will be transported from the three digester sites to a central gas upgrade system located at the fourth site that will upgrade the biogas to pipeline quality RNG for sale. These leases expire at various dates between 2031 and 2050. Since the Company adopted the practical expedient, all amounts paid to the lessor under these arrangements for cow manure and non-lease services are classified as lease payments and are included in the calculation of the right-of-use assets and lease liabilities. This results in significantly higher right-of-use assets and lease liabilities than if the Company did not elect this practical expedient. The Company also has one office equipment finance lease, which expires in 2025. As of March 31, 2022, right-of-use assets under finance leases totaling $26.9 million are included in "Finance right-of-use assets," and related lease liabilities totaling $21.4 million ($4.0 million in current and $17.4 million in long-term) are included in the Consolidated Balance Sheets.
The following table presents the (a) costs by lease category and (b) other quantitative information relating to the Company’s leases (in thousands):
 Three Months Ended March 31,
 20222021
Lease Cost
 
 
 
Finance lease cost:  
Amortization of right-of-use assets (1)$464 $— 
Interest on lease liabilities (1)262 11 
Operating lease cost139 61 
Short-term lease cost379 132 
Variable lease cost (2)115 39 
Total lease cost$1,359 $243 
(1)$0.6 million and $0.4 million of amortization and interest expense for the three months ended March 31, 2022 and 2021, respectively, were capitalized as part of construction in progress, for related finance lease liabilities of $23.0 million and $0.6 million, respectively. The accumulated capitalized amounts of $3.0 million are included in "Property, plant and equipment, net" in the Consolidated Balance Sheets as the related NW Iowa RNG facilities were still under construction on March 31, 2022. Since these leases include approximately 75% fuel supplies, when the RNG facilities reach 60% production (expected in the second or third quarter of 2022), these capitalized amounts will be moved to inventory, and as units are sold they will be expensed through cost of goods sold.
(2)Represents amounts incurred in excess of minimum payments, including payments for common area expenses under our office and research facility lease, and additional amounts due under our NW Iowa RNG leases based on the number of cows maintained by the owners above the minimum required by the contracts of the respective facilities.
 Three Months Ended March 31,
 20222021
Other Information


Cash paid for amounts included in the measurement of lease liabilities:  
Operating cash flows from finance leases$16$6
Operating cash flows from operating leases$456$61
Finance cash flows from finance leases$34$7
Right-of-use asset obtained in exchange for new finance lease liabilities$—$—
Right-of-use asset obtained in exchange for new operating lease liabilities$—$1,562
Weighted-average remaining lease term, finance lease (months)215221
Weighted-average remaining lease term, operating leases (months)7194
Weighted-average discount rate - finance leases (1)5%13%
Weighted-average discount rate - operating leases (1)5%5%
(1)The discount rate used for operating and finance leases is based on the Company's implicit borrowing rate ("IBR"). The Company estimated the IBR based on collateralized borrowings for similar terms and payments.
The table below shows the future minimum payments under non-cancelable financing and operating leases at March 31, 2022 (in thousands):

Year ending December 31,
Operating Leases
Finance Leases
2022 (remaining)$447 $2,204 
2023528 1,713 
2024305 1,729 
2025315 1,743 
2026324 1,781 
2027 and thereafter706 22,130 
Total2,625 31,300 
Less: Amounts representing present value discounts371 9,868 
Total lease liabilities2,254 21,432 
Less: current portion416 4,029 
Long-term portion$1,838 $17,403 
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, that 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. As of March 31, 2022, right-of-use assets under operating leases totaling $2.2 million are included in "Operating right-of use assets," and related lease liabilities totaling $2.3 million ($0.4 million in current and $1.8 million in long-term) are included in the Consolidated Balance Sheets.
The Company also 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, related equipment and pipelines to condition raw biogas from cow manure provided by the farmers. The partially conditioned biogas will be transported from the three digester sites to a central gas upgrade system located at the fourth site that will upgrade the biogas to pipeline quality RNG for sale. These leases expire at various dates between 2031 and 2050. Since the Company adopted the practical expedient, all amounts paid to the lessor under these arrangements for cow manure and non-lease services are classified as lease payments and are included in the calculation of the right-of-use assets and lease liabilities. This results in significantly higher right-of-use assets and lease liabilities than if the Company did not elect this practical expedient. The Company also has one office equipment finance lease, which expires in 2025. As of March 31, 2022, right-of-use assets under finance leases totaling $26.9 million are included in "Finance right-of-use assets," and related lease liabilities totaling $21.4 million ($4.0 million in current and $17.4 million in long-term) are included in the Consolidated Balance Sheets.
The following table presents the (a) costs by lease category and (b) other quantitative information relating to the Company’s leases (in thousands):
 Three Months Ended March 31,
 20222021
Lease Cost
 
 
 
Finance lease cost:  
Amortization of right-of-use assets (1)$464 $— 
Interest on lease liabilities (1)262 11 
Operating lease cost139 61 
Short-term lease cost379 132 
Variable lease cost (2)115 39 
Total lease cost$1,359 $243 
(1)$0.6 million and $0.4 million of amortization and interest expense for the three months ended March 31, 2022 and 2021, respectively, were capitalized as part of construction in progress, for related finance lease liabilities of $23.0 million and $0.6 million, respectively. The accumulated capitalized amounts of $3.0 million are included in "Property, plant and equipment, net" in the Consolidated Balance Sheets as the related NW Iowa RNG facilities were still under construction on March 31, 2022. Since these leases include approximately 75% fuel supplies, when the RNG facilities reach 60% production (expected in the second or third quarter of 2022), these capitalized amounts will be moved to inventory, and as units are sold they will be expensed through cost of goods sold.
(2)Represents amounts incurred in excess of minimum payments, including payments for common area expenses under our office and research facility lease, and additional amounts due under our NW Iowa RNG leases based on the number of cows maintained by the owners above the minimum required by the contracts of the respective facilities.
 Three Months Ended March 31,
 20222021
Other Information


Cash paid for amounts included in the measurement of lease liabilities:  
Operating cash flows from finance leases$16$6
Operating cash flows from operating leases$456$61
Finance cash flows from finance leases$34$7
Right-of-use asset obtained in exchange for new finance lease liabilities$—$—
Right-of-use asset obtained in exchange for new operating lease liabilities$—$1,562
Weighted-average remaining lease term, finance lease (months)215221
Weighted-average remaining lease term, operating leases (months)7194
Weighted-average discount rate - finance leases (1)5%13%
Weighted-average discount rate - operating leases (1)5%5%
(1)The discount rate used for operating and finance leases is based on the Company's implicit borrowing rate ("IBR"). The Company estimated the IBR based on collateralized borrowings for similar terms and payments.
The table below shows the future minimum payments under non-cancelable financing and operating leases at March 31, 2022 (in thousands):

Year ending December 31,
Operating Leases
Finance Leases
2022 (remaining)$447 $2,204 
2023528 1,713 
2024305 1,729 
2025315 1,743 
2026324 1,781 
2027 and thereafter706 22,130 
Total2,625 31,300 
Less: Amounts representing present value discounts371 9,868 
Total lease liabilities2,254 21,432 
Less: current portion416 4,029 
Long-term portion$1,838 $17,403