Leases

12 Months Ended

Dec. 31, 2023

Leases

Leases

Note 12. Leases

The Company enters into leases for office space, warehouse space and equipment in our corporate office and operating regions as well as vehicles, compressors and surface rentals related to our business operations. In addition, the Company has right-of-way leases to operate the San Pedro Bay Pipeline. For the year ended December 31, 2023, the Company leases qualify as operating leases and the Company did not have any existing or new leases qualifying as financing leases. Most of the Company’s leases, other than the Company’s corporate office lease, have an initial term and may be extended on a month-to-month basis after expiration of the initial term. Most of our leases can be terminated with 30-day prior written notice. The majority of our month-to-month leases are not included as a lease liability in the Company’s balance sheet because continuation of the lease is not reasonably certain. Additionally, the Company elected the short-term practical expedient to exclude leases with a term of twelve months or less.

The Company corporate office lease does not provide an implicit rate. To determine the present value of the lease payments, the Company uses an incremental borrowing rate based on the information available at the inception date. To determine the incremental borrowing rate, the Company applied a portfolio approach based on the applicable lease terms and the current economic environment. The Company uses a reasonable market interest rate for the Company office equipment and vehicle leases.

For the year ended December 31, 2023 and 2022, the Company recognized approximately $2.1 million and $1.6 million, respectively, of costs relating to the operating leases in the Consolidated Statements of Operations.

The following table presents the Company’s right-of-use assets and lease liabilities for the period presented:

	December 31,		December 31,
	2023		2022
	(In thousands)
Right-of-use asset	$	5,756	$	7,376
Lease liabilities:
Current lease liability		1,737		1,401
Long-term lease liability		5,090		6,567
Total lease liability	$	6,827	$	7,968

The following table reflects the Company’s maturity analysis of the minimum lease payment obligations under non-cancelable operating leases with a remaining term in excess of one year (in thousands):

		Office and	Leased vehicles
		warehouse	and office
	leases		equipment		Total
2024	$	1,417	$	762	$	2,179
2025		1,417		550		1,967
2026		1,197		64		1,261
2027		830		—		830
2028 and thereafter		1,786		—		1,786
Total lease payments		6,647		1,376		8,023
Less: interest		1,098		98		1,196
Present value of lease liabilities	$	5,549	$	1,278	$	6,827

The weighted average remaining lease terms and discount rate for all of the Company’s operating leases for the period presented:

	December 31,
	2023		2022
Weighted average remaining lease term (years):
Office and warehouse space	4.28		4.71
Vehicles	0.42		0.47
Office equipment	0.01		0.04
Weighted average discount rate:
Office and warehouse space	5.22	%	4.87	%
Vehicles	1.22	%	1.30	%
Office equipment	0.07	%	0.11	%