LEASES

12 Months Ended

Dec. 31, 2024

NOTE 9 – 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 December 31, 2024.

For the year ended December 31, 2024 and December 31, 2023, the components of the Company’s lease expense were as follows (in thousands):


	Year Ended December 31, 2024		Year Ended December 31, 2023
Operating Lease Cost	$	6,494	$	6,077
Short-term Lease Cost		136		130
Variable Lease Cost		382		320
Sublease Income		—		(76	)
Total Lease Cost	$	7,012	$	6,451

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


	Year Ended			Year Ended
	December 31, 2024			December 31, 2023
Weighted-average remaining lease term (in years)		7.11			6.55
Weighted average discount rate		7.57	%		5.80	%

Future undiscounted cash flows for each of the next five years and thereafter and reconciliation to the lease liabilities recognized on the consolidated balance sheet as of December 31, 2024 were as follows (in thousands):


2025	$	5,788
2026		5,113
2027		3,781
2028		3,094
2029		2,538
Thereafter		9,490
Total lease payments	$	29,804
Less: imputed interest		(6,918	)
Present value of lease liabilities	$	22,886

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 year ended December 31, 2024 and 2023, tool rental revenue was approximately $117.9 million and $119.2 million, respectively. Our lease contract periods are short-term in nature and are typically daily, monthly, per well, or footage based. As it is unknown when the customers will return our tools, no maturity table is presented.