Leases

12 Months Ended

Dec. 31, 2025

NOTE 4 — LEASES

The Company determines if an arrangement is a lease at inception of the contract. If an arrangement is a lease, the present value of the related lease payments is recorded as a liability, and an equal amount is capitalized on the Company’s consolidated balance sheets. The Company elected to include payments for non-lease components associated with certain leases when determining the present value of the lease payments. Right of use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The Company’s estimated incremental borrowing rate, determined at the lease commencement date using the Company’s average secured borrowing rate, is used to calculate present value. The weighted average estimated incremental borrowing rates used for the year ended December 31, 2025 were 5.40% and 6.15% for operating leases and finance leases, respectively. For these purposes, the lease term includes options to extend the lease when it is reasonably certain that the Company will exercise such option. Leases with terms of 12 months or less at inception are not recorded on the consolidated balance sheets unless there is a significant cost to terminate the lease, including the cost of removal of the leased asset. As the Company is the responsible party under these arrangements, the Company records the resulting assets and liabilities on a gross basis in its consolidated balance sheets.

The following table presents supplemental consolidated statements of income information related to lease expenses, on a gross basis, for the years ended December 31, 2025 and 2024, respectively (in thousands). Lease payments represent gross payments to vendors, which, for certain of the Company’s operating assets, are partially offset by amounts received from other working interest owners in the Company’s operated wells.


	Year Ended December 31,
	2025		2024
Operating leases
Lease operating	$	35,407	$	30,141

General and administrative	5,189		2,910
Total operating leases(1)	40,596		33,051
Short-term leases
Lease operating	68,277		46,770
Midstream operating	8,933		11,110
General and administrative	22		54
Total short-term leases(2)(3)	77,232		57,934
Finance leases
Depreciation of assets	1,765		2,296
Interest on lease liabilities	866		607
Total finance leases	2,631		2,903
Total lease expense	$	120,459	$	93,888

_____________________

(1) Does not include gross payments related to drilling rig leases of $84.7 million and $87.8 million for the years ended December 31, 2025 and 2024, respectively, that were capitalized and recorded in “Oil and natural gas properties, full-cost method” in the consolidated balance sheets at December 31, 2025 and 2024, respectively.

(2) These costs are related to leases that are not recorded as right of use assets or lease liabilities in the consolidated balance sheets as they are short-term leases.

(3) Does not include gross payments related to short-term drilling rig leases and other equipment rentals of $265.9 million and $231.8 million for the years ended December 31, 2025 and 2024, respectively, that were capitalized and recorded in “Oil and natural gas properties, full-cost method” in the consolidated balance sheets at December 31, 2025 and 2024, respectively.

The following table presents supplemental consolidated balance sheet information related to leases as of December 31, 2025 and 2024, respectively (in thousands).


	December 31,
	2025		2024
Operating leases
Other long-term assets	$	138,655	$	127,445
Other current liabilities	$	(65,091)	$	(57,924)
Other long-term liabilities	(79,190)		(72,498)
Total operating lease liabilities	$	(144,281)	$	(130,422)

Finance leases
Other property and equipment, at cost	$	14,204	$	12,783
Accumulated depreciation	(11,297)		(9,532)
Net property and equipment	$	2,907	$	3,251
Other current liabilities	$	(1,113)	$	(1,312)
Other long-term liabilities	(1,175)		(1,021)
Total finance lease liabilities	$	(2,288)	$	(2,333)

The following table presents supplemental consolidated cash flow information related to lease payments for the years ended December 31, 2025 and 2024, respectively (in thousands).


	Year Ended December 31,
	2025		2024
Cash paid related to lease liabilities
Operating cash payments for operating leases	$	36,725	$	37,155
Investing cash payments for operating leases	$	84,663	$	87,776
Financing cash payments for finance leases	$	1,466	$	1,257

Right of use assets obtained in exchange for lease obligations entered into during the period
Operating leases	$	139,400	$	207,279
Finance leases	$	1,421	$	1,467

The following table presents the maturities of lease liabilities at December 31, 2025 (in years).


Weighted-Average Remaining Lease Term						December 31, 2025
Operating leases						7.3
Finance leases						1.9

The following table presents a schedule of future minimum lease payments required under all lease agreements as of December 31, 2025 (in thousands).


	December 31, 2025
	Operating Leases		Finance Leases


2026	$	65,091	$	1,113
2027	25,690		808
2028	13,383		384
2029	7,618		—
2030	5,076		—
Thereafter	56,618		—
Total lease payments	173,476		2,305
Less imputed interest	(29,195)		(17)
Total lease obligations	144,281		2,288
Less current obligations	(65,091)		(1,113)
Long-term lease obligations	$	79,190	$	1,175

Leases