LEASES

6 Months Ended

Jun. 30, 2024

NOTE 12 – LEASES

The Company leases various facilities and vehicles under noncancelable operating lease agreements. The remaining lease terms for our leases range from 1 month to 14 years. These leases often include options to extend the term of the lease which may be for periods of up to 5 years. When it is reasonably certain that the option will be exercised, the impact of the renewal term is included in the lease term for purposes of determining total future lease payments and measuring the ROU asset and lease liability. We apply the short-term lease policy election, which allows us to exclude from recognition leases with an original term of 12 months or less. We have not entered into any finance leases as of June 30, 2024.

For the three and six months ended June 30, 2024, the components of the Company’s lease expense were as follows (in thousands):


	Three months ended June 30. 2024		Three months ended June 30. 2023
Operating Lease Cost	$	1,588	$	1,532
Short-term Lease Cost		35		33
Variable Lease Cost		74		81
Sublease Income		—		(30	)
Total Lease Cost	$	1,697	$	1,616


	Six months ended June 30, 2024		Six months ended June 30, 2023
Operating Lease Cost	$	3,041	$	3,050
Short-term Lease Cost		70		63
Variable Lease Cost		162		165
Sublease Income		—		(76	)
Total Lease Cost	$	3,273	$	3,202

Supplemental balance sheet information related to leases was as follows (in thousands):


	Six months ended June 30, 2024

Weighted-average remaining lease term (in years)		7.19
Weighted average discount rate		7.35	%


	Six months ended
	June 30, 2024
Cash paid for amounts included in the measurement of lease liabilities		2,981

Future undiscounted cash flows for each of the next five years and thereafter and reconciliation to the lease liabilities recognized on the unaudited condensed consolidated balance sheet as of June 30, 2024 were as follows (in thousands):



2024	$	2,874
2025		5,007
2026		4,477
2027		3,263
2028		2,686
Thereafter		9,636
Total lease payments	$	27,943
Less: imputed interest		(5,996	)
Present value of lease liabilities	$	21,947

The Company leases downhole drilling tools to companies in the oil and natural gas industry. Such leases are accounted for in accordance with ASC 842. For the three and six months ended June 30, 2024, tool rental revenue was approximately $28.3 million and $58.3 million, respectively. Our lease contract periods are short-term in nature and are typically daily, monthly, per well, or footage based. Due to the short term nature of the contracts, no maturity table is presented.