Leases

12 Months Ended

Dec. 31, 2022

Leases [Abstract]

Lessee, Operating Leases

14. LEASES

The Partnership adopted ASU 2016-02, Leases (Topic 842) on January 1, 2019, using the modified retrospective method applied to all leases in existence on January 1, 2019. The Partnership elected not to reassess contracts that commenced prior to adoption, to continue applying its current accounting policy for existing or expired land easements, and not to recognize ROU assets or lease liabilities for short-term leases.

Lessee. The Partnership has entered into operating leases for corporate offices, shared field offices, easements, and equipment supporting the Partnership’s operations, with both Occidental and third parties as lessors. The Partnership also had subleased equipment from Occidental via finance leases that extended through April 2020.

During the first quarter of 2020, the Partnership entered into finance leases with third parties for equipment and vehicles. Certain of these equipment leases were amended during the third quarter of 2021 requiring reassessment of lease classification. As a result, these leases were classified as operating leases.

The following table summarizes information related to the Partnership’s leases:

	December 31,
	2022				2021
thousands except lease term and discount rate	Operating Leases		Finance Leases		Operating Leases		Finance Leases
Assets
Other assets	$	67,087	$	—	$	71,725	$	—
Net property, plant, and equipment	—		7,402		—		5,449
Total lease assets (1)	$	67,087	$	7,402	$	71,725	$	5,449
Liabilities
Accrued liabilities	$	10,342	$	—	$	10,558	$	—
Short-term debt	—		2,659		—		3,794
Other liabilities	33,318		—		35,442		—
Long-term debt	—		4,160		—		1,533
Total lease liabilities (1)	$	43,660	$	6,819	$	46,000	$	5,327
Weighted-average remaining lease term (years)	8		6		8		2
Weighted-average discount rate (%)	4.5		8.2		4.1		3.4

________________________________________________________________________________________

(1)For the years ended December 31, 2022 and 2021, includes additions to ROU assets of $8.3 million and $44.9 million, respectively, and additions to lease liabilities of $8.3 million and $14.9 million, respectively, related to operating leases. Includes additions to ROU assets and lease liabilities of $7.1 million and $0.9 million related to finance leases for the years ended December 31, 2022 and 2021, respectively.

The following table summarizes the Partnership’s lease cost:

	Year Ended December 31,
thousands	2022		2021		2020
Operating lease cost	$	14,767	$	10,753	$	7,702
Short-term lease cost	38,875		37,616		43,102
Variable lease cost	5,611		2,628		(46)
Sublease income	(414)		(414)		(414)
Finance lease cost
Amortization of ROU assets	5,377		7,151		8,346
Interest on lease liabilities	414		861		1,516
Total lease cost	$	64,630	$	58,595	$	60,206

14. LEASES

The following table summarizes cash paid for amounts included in the measurement of lease liabilities:

	Year Ended December 31,
	2022				2021				2020
thousands	Operating Leases		Finance Leases		Operating Leases		Finance Leases		Operating Leases		Finance Leases
Operating cash flows	$	13,616	$	229	$	5,805	$	861	$	5,750	$	1,516
Financing cash flows	—		4,318		—		6,513		—		14,207

The following table reconciles the undiscounted cash flows to the operating and finance lease liabilities at December 31, 2022:

thousands	Operating Leases		Finance Leases
2023	$	10,517	$	2,720
2024	7,877		1,424
2025	5,769		3,810
2026	4,450		52
2027	4,332		—
Thereafter	19,289		—
Total lease payments	52,234		8,006
Less portion representing imputed interest	8,574		1,187
Total lease liabilities	$	43,660	$	6,819

Lessee, Finance Leases

14. LEASES

The Partnership adopted ASU 2016-02, Leases (Topic 842) on January 1, 2019, using the modified retrospective method applied to all leases in existence on January 1, 2019. The Partnership elected not to reassess contracts that commenced prior to adoption, to continue applying its current accounting policy for existing or expired land easements, and not to recognize ROU assets or lease liabilities for short-term leases.

Lessee. The Partnership has entered into operating leases for corporate offices, shared field offices, easements, and equipment supporting the Partnership’s operations, with both Occidental and third parties as lessors. The Partnership also had subleased equipment from Occidental via finance leases that extended through April 2020.

During the first quarter of 2020, the Partnership entered into finance leases with third parties for equipment and vehicles. Certain of these equipment leases were amended during the third quarter of 2021 requiring reassessment of lease classification. As a result, these leases were classified as operating leases.

The following table summarizes information related to the Partnership’s leases:

	December 31,
	2022				2021
thousands except lease term and discount rate	Operating Leases		Finance Leases		Operating Leases		Finance Leases
Assets
Other assets	$	67,087	$	—	$	71,725	$	—
Net property, plant, and equipment	—		7,402		—		5,449
Total lease assets (1)	$	67,087	$	7,402	$	71,725	$	5,449
Liabilities
Accrued liabilities	$	10,342	$	—	$	10,558	$	—
Short-term debt	—		2,659		—		3,794
Other liabilities	33,318		—		35,442		—
Long-term debt	—		4,160		—		1,533
Total lease liabilities (1)	$	43,660	$	6,819	$	46,000	$	5,327
Weighted-average remaining lease term (years)	8		6		8		2
Weighted-average discount rate (%)	4.5		8.2		4.1		3.4

________________________________________________________________________________________

(1)For the years ended December 31, 2022 and 2021, includes additions to ROU assets of $8.3 million and $44.9 million, respectively, and additions to lease liabilities of $8.3 million and $14.9 million, respectively, related to operating leases. Includes additions to ROU assets and lease liabilities of $7.1 million and $0.9 million related to finance leases for the years ended December 31, 2022 and 2021, respectively.

The following table summarizes the Partnership’s lease cost:

	Year Ended December 31,
thousands	2022		2021		2020
Operating lease cost	$	14,767	$	10,753	$	7,702
Short-term lease cost	38,875		37,616		43,102
Variable lease cost	5,611		2,628		(46)
Sublease income	(414)		(414)		(414)
Finance lease cost
Amortization of ROU assets	5,377		7,151		8,346
Interest on lease liabilities	414		861		1,516
Total lease cost	$	64,630	$	58,595	$	60,206

14. LEASES

The following table summarizes cash paid for amounts included in the measurement of lease liabilities:

	Year Ended December 31,
	2022				2021				2020
thousands	Operating Leases		Finance Leases		Operating Leases		Finance Leases		Operating Leases		Finance Leases
Operating cash flows	$	13,616	$	229	$	5,805	$	861	$	5,750	$	1,516
Financing cash flows	—		4,318		—		6,513		—		14,207

The following table reconciles the undiscounted cash flows to the operating and finance lease liabilities at December 31, 2022:

thousands	Operating Leases		Finance Leases
2023	$	10,517	$	2,720
2024	7,877		1,424
2025	5,769		3,810
2026	4,450		52
2027	4,332		—
Thereafter	19,289		—
Total lease payments	52,234		8,006
Less portion representing imputed interest	8,574		1,187
Total lease liabilities	$	43,660	$	6,819

Lessor, Operating Leases

Lessor. Effective December 31, 2019, an affiliate of Occidental and a wholly owned subsidiary of the Partnership, the lessor, entered into an operating and maintenance agreement pursuant to which Occidental provides operational and maintenance services with respect to a crude-oil gathering system and associated treating facilities owned by the Partnership through December 31, 2021. The agreement and underlying contracts include (i) fixed consideration, which is measured as the minimum-volume commitment for both gathering and treating, and (ii) variable consideration, which consists of all volumes above the minimum-volume commitment. Subsequent to the initial two-year term, the agreement provides for automatic one-year extensions, unless either party exercises its option to terminate the lease with advance notice. In April 2021, the Partnership exercised its option to terminate the operating and maintenance agreement with Occidental effective December 31, 2021. For the years ended December 31, 2021 and 2020, the Partnership recognized fixed-lease revenue of $175.8 million and $175.8 million, respectively, and variable-lease revenue of $3.5 million and $47.9 million, respectively, related to these agreements, with such amounts included in Service revenues – fee based in the consolidated statements of operations.

In December 2021, one of the Partnership’s processing agreements was amended. The amended contract was determined to be a lease agreement; however, the Partnership elected the practical expedient to combine the lease and the non-lease components, which consists of processing and stabilization services, into a single service component and will account for the contract under Revenue from Contracts with Customers (Topic 606).