The Company leases certain office space, processing plants, drilling rigs and completion services, gas gathering lines, compressor stations, and other office and field equipment. Leases with an initial term of 12 months or less are considered short-term and are not recorded on the balance sheet. Instead, the short-term leases are recognized in expense on a straight-line basis over the lease term.

Most leases include one or more options to renew, with renewal terms that can extend the lease from one to 20 years or more. The exercise of the lease renewal options is at the Company’s sole discretion. The depreciable lives of the leased assets are limited by the expected lease term, unless there are a transfer of title or purchase option reasonably certain of exercise.

Certain of the Company’s lease agreements include minimum payments based on a percentage of produced volumes over contractual levels and others include rental payments adjusted periodically for inflation.

The Company considers all contracts that have assets specified in the contract, either explicitly or implicitly, that the Company has substantially all of the capacity of the asset, and has the right to obtain substantially all of the economic benefits of that asset, without the lessor’s ability to have a substantive right to substitute that asset, as leased assets. For any contract deemed to include a leased asset, that asset is capitalized on the balance sheet as a right-of-use asset and a corresponding lease liability is recorded at the present value of the known future minimum payments of the contract using a discount rate on the date of commencement. The leased asset classification is determined at the date of recording as either operating or financing, depending upon certain criteria of the contract.

The discount rate used for present value calculations is the discount rate implicit in the contract. If an implicit rate is not determinable, a collateralized incremental borrowing rate is used at the date of commencement. As new leases commence or previous leases are modified the discount rate used in the present value calculation is the current period applicable discount rate.

The Company has made an accounting policy election to adopt the practical expedient for combining lease and non-lease components on an asset class basis. This expedient allows the Company to combine non-lease components such as real estate taxes, insurance, maintenance, and other operating expenses associated with the leased premises with the lease component of a lease agreement on an asset class basis when the non-lease components of the agreement cannot be easily bifurcated from the lease payment. Currently, the Company is only applying this expedient to certain office space agreements.

The Company’s lease assets and liabilities consisted of the following items (in thousands):


		December 31,
Leases	Balance Sheet Classification	2020		2021
Operating Leases
Operating lease right-of-use assets:
Processing plants	Operating lease right-of-use assets	$	1,302,290		1,739,550
Drilling rigs and completion services	Operating lease right-of-use assets		29,894		9,860
Gas gathering lines and compressor stations ⁽¹⁾	Operating lease right-of-use assets		1,241,090		1,634,928
Office space	Operating lease right-of-use assets		36,879		33,083
Vehicles	Operating lease right-of-use assets		2,704		2,009
Other office and field equipment	Operating lease right-of-use assets		746		482
Total operating lease right-of-use assets		$	2,613,603		3,419,912

Short-term operating lease obligation	Short-term lease liabilities	$	265,178		455,950
Long-term operating lease obligation	Long-term lease liabilities		2,348,425		2,963,962
Total operating lease obligation		$	2,613,603		3,419,912

Finance Leases
Finance lease right-of-use assets:
Vehicles	Other property and equipment	$	1,206		550
Total finance lease right-of-use assets ⁽²⁾		$	1,206		550

Short-term finance lease obligation	Short-term lease liabilities	$	845		397
Long-term finance lease obligation	Long-term lease liabilities		361		153
Total finance lease obligation		$	1,206		550

(1)	Gas gathering lines and compressor stations leases includes $1.1 billion and $1.5 billion related to Antero Midstream as of December 31, 2020 and 2021, respectively. See “—Related party lease disclosure” for additional discussion.

(2)	Financing lease assets are recorded net of accumulated amortization of $3 million and $2 million as of December 31, 2020 and 2021, respectively.

The processing plants, gathering lines and compressor stations that are classified as lease liabilities are classified as such under ASC 842, Leases, because Antero is the sole customer of the assets and because Antero makes the decisions that most impact the economic performance of the assets.

(b)	Supplemental Information Related to Leases

Costs associated with operating and finance leases were included in the consolidated statement of operations and comprehensive loss (in thousands):


			Year Ended December 31,
Cost	Classification	Location	2019		2020		2021
Operating lease cost	Statement of operations	Gathering, compression, processing, and transportation	$	842,440		1,498,221		1,518,305
Operating lease cost	Statement of operations	General and administrative		11,228		11,530		10,901
Operating lease cost	Statement of operations	Contract termination and rig stacking		10,692		8,528		4,213
Operating lease cost	Statement of operations	Lease operating		—		—		142
Operating lease cost	Balance sheet	Proved properties ⁽¹⁾		194,522		104,146		103,741
Total operating lease cost			$	1,058,882		1,622,425		1,637,302

Finance lease cost:
Amortization of right-of-use assets	Statement of operations	Depletion, depreciation, and amortization	$	1,471		872		522
Interest on lease liabilities	Statement of operations	Interest expense		335		208		—
Total finance lease cost			$	1,806		1,080		522

Short-term lease payments			$	162,654		122,577		86,039

(1)	Capitalized costs related to drilling and completion activities.

(c)	Supplemental Cash Flow Information Related to Leases

The following is the Company’s supplemental cash flow information related to leases (in thousands):


	Year Ended December 31,
	2019		2020		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	809,667		1,576,984		1,352,941
Operating cash flows from finance leases		335		208		—
Investing cash flows from operating leases		178,898		106,867		88,910
Financing cash flows from finance leases		2,507		1,291		859

Noncash activities:
Right-of-use assets obtained in exchange for new operating lease obligations	$	3,720,945		202,125		437,045
Increase (decrease) to existing right-of-use assets and lease obligations from operating lease modifications, net ⁽¹⁾	$	(681,686)		(173,563)		702,512

(1)

During the year ended December 31, 2019, the weighted average discount rate for remeasured operating leases increased from 6.0% as of January 1, 2019 to 12.4% as of December 31, 2019. During the year ended December 31, 2020, the weighted average discount rate for remeasured operating leases increased from 10.0% as of December 31, 2019 to 14.4% as of December 31, 2020. During the year ended December 31, 2021, the weighted average discount rate for remeasured operating leases decreased from 14.4% as of December 31, 2020 to 5.0% as of December 31, 2021.

(d)	Maturities of Lease Liabilities

The table below is a schedule of future minimum payments for operating and financing lease liabilities as of December 31, 2021 (in thousands):


	Operating Leases		Financing Leases		Total
2022	$	634,632		424		635,056
2023		622,266		76		622,342
2024		612,344		67		612,411
2025		540,291		22		540,313
2026		489,589		—		489,589
Thereafter		1,386,882		—		1,386,882
Total lease payments		4,286,004		589		4,286,593
Less: imputed interest		(866,092)		(39)		(866,131)
Total	$	3,419,912		550		3,420,462

(e)	Lease Term and Discount Rate

The following table sets forth the Company’s weighted-average remaining lease term and discount rate:


	December 31, 2020				December 31, 2021
	Operating Leases		Finance Leases		Operating Leases		Finance Leases
Weighted average remaining lease term	8.0 years		1.5 years		7.6 years		1.9 years
Weighted average discount rate	13.7	%	6.2	%	5.5	%	5.6	%

(f)	Related Party Lease Disclosure

The Company has a gathering and compression agreement with Antero Midstream, whereby Antero Midstream receives a low-pressure gathering fee per Mcf, a high-pressure gathering fee per Mcf, and a compression fee per Mcf, in each case subject to annual adjustments based on the consumer price index. If and to the extent the Company requests that Antero Midstream construct new high pressure lines and compressor stations, the gathering and compression agreement contains options at Antero Midstream’s election for either (i) minimum volume commitments that require Antero Resources to utilize or pay for 75% of the high pressure gathering capacity and 70% of the compression capacity of such new construction for 10 years or (ii) a cost of service fee that allows the Antero Midstream to earn a 13% rate of return on such new construction over seven years.

In December 2019, the Company and Antero Midstream agreed to extend the initial term of the gathering and compression agreement to 2038 and established a growth incentive fee program whereby low-pressure gathering fees will be reduced from 2020 through 2023 to the extent the Company achieves certain volumetric targets at certain points during such time. Upon completion of the initial contract term, the gathering and compression agreement will continue in effect from year to year until such time as the agreement is terminated, effective upon an anniversary of the effective date of the agreement, by either the Company or Antero Midstream on or before the 180^th day prior to the anniversary of such effective date. The Company achieved the volumetric targets during each quarter for the year ended December 31, 2020, and earned rebates of $48 million. The Company achieved the volumetric target during the fourth quarter of 2021, and earned a rebate of $12 million.

For the years ended December 31, 2019, 2020 and 2021, gathering and compression fees paid by Antero related to this agreement were $643 million, $679 million and $705 million, respectively. As of December 31, 2020 and 2021, $55 million and $54 million was included within Accounts payable, related parties, respectively, on the consolidated balance sheet as due to Antero Midstream related to this agreement.