XML 36 R19.htm IDEA: XBRL DOCUMENT

Leases Leases

9 Months Ended

Sep. 30, 2019

13.

LEASES

SemGroup is a lessee of buildings, land, compressors, vehicles, office equipment and other small equipment under operating leases of varying durations. These leases have fixed and variable payments with variable payments generally being based on usage or the pass through of ownership costs from the lessors. Generally, these leases contain the right to extend the lease for a limited term or on a month to month basis subsequent to expiration of the initial term. Lease renewal periods have been accounted for where we have the right to extend the term and the renewal is reasonably assured at lease inception.

SemGroup is a lessor of certain land, storage tanks and a barge dock located on the Gulf Coast. Based on the terms of the agreement, these assets are accounted for as a direct financing lease. This lease has fixed and variable payments with variable payments generally being based on usage. The agreement has an initial term of 10 years and the customer has the right to renew for two successive five year periods. Subsequent to those periods, either party may cancel the agreement, otherwise it will continue to renew for five year periods. Risks related to unguaranteed residual values are mitigated through insurance and regular maintenance.

We have elected the practical expedients offered by ASC 842 which do not require a reassessment of whether existing or completed contracts at adoption contain a lease, the lease classification or initial direct costs. Additionally, we have elected the practical expedient not to reassess certain land easements at adoption. As such, certain storage tank, pipeline leases and land easements, which are not currently treated as leases, may become leases if these agreements are renewed or modified depending on the terms of the renewal or modification. Additionally, the classification for existing leases may change as agreements are renewed or modified.

Lessee

We have elected the practical expedient to not separate lease and non-lease components for agreements where we lease land, buildings, storage tanks, compressors, and small machinery and equipment. Financing and operating lease liabilities are reported within “Other current liabilities” and “Other noncurrent liabilities” in our condensed consolidated balance sheet.

At September 30, 2019, we have recorded the following right-of-use assets and lease liabilities (in thousands):



	September 30, 2019
Right of use assets
Financing	$	2,748
Operating	$	86,917
Lease liabilities
Financing	$	2,799
Operating	$	90,132

During the three months and nine months ended September 30, 2019, we have recorded the following (in thousands):



	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Finance lease cost:
Amortization of right-of-use assets	$	162	$	485
Interest expense on lease liabilities	$	36	$	115
Operating lease costs	$	2,142	$	6,642
Variable lease costs	$	502	$	1,570
Cash paid for amounts included in the measurement of lease liabilities:
Financing	$	146	$	385
Operating	$	891	$	2,514
Noncash information on lease liabilities arising from obtaining right-of-use assets:
Financing	$	—	$	3,232
Weighted average remaining lease term (in years):
Financing			4.25 years
Operating			41.7 years
Weighted average discount rate:
Financing			5.16		%
Operating			5.16		%

Undiscounted cash flows for the remainder of the year and on an annual basis for the following years are as follows (in thousands):



	Financing		Operating
2019	$	183	$	1,473
2020	732		6,125
2021	732		6,373
2022	732		5,778
2023	732		5,532
Thereafter	—		206,362
Total undiscounted cash flows	$	3,111	$	231,643
Short-term lease liabilities	$	614	$	4,965



Long-term lease liabilities	2,185		85,167
Total lease liabilities	$	2,799	$	90,132
Difference	$	312	$	141,511

Lessor

At September 30, 2019, the components of our net investment in direct financing leases are as follows (in thousands):



	September 30, 2019
Carrying amount of receivable	$	73,027
Unguaranteed residual value	69,222
Deferred selling profit on direct financing leases	(73,027		)
Net investment in sales-type and direct financing leases	$	69,222

For the three months and nine months ended September 30, 2019, we have recognized the following amounts of income from our direct financing leases as follows (in thousands):



	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Interest income	$	3,433	$	10,298
Income related to variable lease payments not included in the lease receivable	440		1,491
Total direct financing lease revenue	$	3,873	$	11,789

Undiscounted cash flows on an annual basis are as follows (in thousands):



	Direct financing leases
2019	$	3,433
2020	13,031
2021	12,800
2022	12,804
2023	12,808
Thereafter	18,151
Total undiscounted cash flows	$	73,027

Leases of Lessor Disclosure [Text Block]

13.