Leases

12 Months Ended

Dec. 31, 2021

LEASES

Lessee Accounting

We have operating and finance leases for real estate, vehicles and equipment. Certain of our vehicle leases include residual value guarantees, which have been excluded from the measurement of our lease liabilities as we do not believe it is probable the residual value guarantees will be paid at the end of the lease. Our real estate and vehicle leases generally include options to renew or extend the lease term at our discretion. These options are included in the measurement of our lease liabilities only when it is reasonably certain that we will exercise these rights.

Balance sheet presentation—Leases are presented in our consolidated balance sheet as follows:


		December 31,
(in thousands)	Balance Sheet Classification	2021		2020
Right-of Use Assets:
Finance leases	Property, plant, and equipment, net	$	8,048	$	7,337
Operating leases	Operating lease right-of-use assets	115,458		122,481
Total lease right-of-use assets		123,506		129,818
Lease Liabilities:
Finance leases - current	Accrued expenses and other current liabilities	$	4,006	$	4,326
Finance leases	Other long-term liabilities	4,498		4,188
Operating leases - current	Current portion of operating lease liabilities	36,389		33,234
Operating leases	Operating lease liabilities	73,521		83,553
Total lease liabilities		$	118,414	$	125,301

Components of total lease cost—Components of total lease cost were as follows:


	Years Ended December 31,
(in thousands)	2021		2020
Finance lease cost:
Amortization of right-of-use assets	$	5,855	$	5,266
Interest on lease liabilities	510		567
Operating lease cost	41,113		31,850
Short-term and variable lease cost	21,756		12,917
Sublease income	(18)		(3,584)
Total lease cost	$	69,216	$	47,016

Lease term and discount rate—Our weighted-average remaining lease term and weighted-average discount rate for operating and finance leases are as follows:


	December 31,
	2021		2020
Weighted-average remaining lease term (years):
Operating lease	6.9		6.3
Finance lease	2.7		2.7
Weighted-average discount rate:
Operating lease	5.3	%	6.7	%
Finance lease	5.0	%	6.0	%

Maturity Analysis—Future minimum payments, as determined in accordance with ASC 842, on our operating and finance leases as of December 31, 2021 are as follows:


(in thousands)	Operating		Finance
2022	$	41,991	$	4,327
2023	30,621		2,429
2024	20,894		1,475
2025	11,488		659
2026	3,799		198
Thereafter	25,131		31
Total future minimum lease payments	133,924		9,119
Interest included within lease payments	(24,014)		(615)
Total lease liabilities	$	109,910	$	8,504

Lessor Accounting

Lease revenue is primarily generated from our ESP leased asset program within our Production & Automation Technologies segment. An ESP rental unit has components consisting of surface, downhole and cable equipment. The average length of these arrangements generally range from 12 months to 14 months. Lease revenue for our leased asset programs was $65.4 million and $54.0 million for the years ended December 31, 2021 and 2020, respectively.

Leased assets—Components of our leased asset program, all of which are included within Property, plant, and equipment, net on our consolidated balance sheet, are as follows:


(in thousands)	Useful life	December 31, 2021
Cable equipment	18 months	$	33,498
Downhole equipment	18 months	43,206
Surface equipment	5 years	73,633
Other lease equipment	3 - 5 years	14,344
		164,681
Accumulated depreciation		(112,610)
Leased assets, net		$	52,071

Depreciation expense on our leased assets was $43.7 million and $67.6 million for the year ended December 31, 2021 and 2020, respectively.