Leases

12 Months Ended

Dec. 31, 2024

Leases [Abstract]

Leases

Leases

The Company leases drilling rigs, facilities (including a water storage facility), vehicles and drilling and compression equipment.

To determine the present value of its right-of-use assets and lease liabilities, the Company calculates a discount rate per lease contract based on an estimate of the rate of interest that the Company would pay to borrow (on a collateralized basis, over a similar term) an amount equal to the lease payment obligation.

The Company has elected a practical expedient to forgo application of the recognition requirements under ASU 2016-02, Leases, to short-term leases; as such, short-term leases are not recorded in the Consolidated Balance Sheets. In addition, the Company has elected a practical expedient to account for lease and nonlease components together as a lease.

Certain of the Company's lease contracts include variable lease payments, such as payments for property taxes and other operating and maintenance expenses and payments based on asset use, which are not included in the lease cost or the present value of the right-of-use asset or lease liability. Certain of the Company's lease contracts provide renewal periods at the Company's option; if a renewal period option is reasonably assured to be exercised, the associated lease payment obligation is included in the present value of the right-of-use asset and lease liability. As of December 31, 2024 and 2023, the Company was not a lessor.

The following table summarizes the Company's lease costs.

	Years Ended December 31,
	2024		2023		2022
	(Thousands)
Operating lease costs	$	41,991	$	26,755	$	19,922
Finance lease costs	5,546		2,414		1,716
Variable and short-term lease costs	33,475		24,151		13,726
Total lease costs (a)	$	81,012	$	53,320	$	35,364

(a)Includes drilling rig lease costs capitalized to property, plant and equipment of $50.5 million, $40.8 million and $25.4 million, respectively, of which $33.1 million, $24.5 million and $17.7 million, respectively, were operating lease costs for the years ended December 31, 2024, 2023 and 2022.

For the years ended December 31, 2024, 2023 and 2022, cash paid for operating lease liabilities and reported in net cash provided by operating activities in the Statements of Consolidated Cash Flows was $13.6 million, $10.1 million and $10.3 million, respectively. For the years ended December 31, 2024, 2023 and 2022, cash paid for finance lease liabilities and reported in net cash used in financing activities in the Statements of Consolidated Cash Flows was $4.2 million, $2.3 million and $1.8 million, respectively.

For the Company's operating leases, as of December 31, 2024, 2023 and 2022, the weighted average remaining term was 3.4 years, 1.6 years and 1.8 years, respectively, and the weighted average discount rate was 5.3%, 4.7% and 4.5%, respectively. For the Company's finance leases, as of December 31, 2024, 2023 and 2022, the weighted average remaining term was 6.8 years, 3.8 years and 3.3 years, respectively, and the weighted average discount rate was 5.1%, 4.8% and 3.9%, respectively.

The Company records its right-of-use assets in other assets and the current and noncurrent portions of its lease liabilities in other current liabilities and other liabilities and credits, respectively, in the Consolidated Balance Sheets. The following table summarizes the Company's right-of-use assets and lease liabilities.

	December 31,
	2024		2023
	(Thousands)
Right-of-Use Assets
Operating	$	60,496	$	42,338
Finance	34,803		6,494
Total right-of-use assets	$	95,299	$	48,832
Lease Liabilities
Current lease liabilities
Operating	$	36,275	$	43,891
Finance	5,603		2,489
Total current lease liabilities	41,878		46,380
Noncurrent lease liabilities
Operating	29,391		8,443
Finance	29,263		3,754
Total noncurrent lease liabilities	58,654		12,197
Total lease liabilities	$	100,532	$	58,577

The following table summarizes the Company's lease payment obligations as of December 31, 2024.

	Operating		Finance		Total
	(Thousands)
2025	$	38,592	$	7,192	$	45,784
2026	8,289		6,420		14,709
2027	7,623		6,057		13,680
2028	6,480		4,806		11,286
2029	5,804		4,523		10,327
Thereafter	5,207		12,126		17,333
Total lease payment obligations	71,995		41,124		113,119
Less: Imputed interest	6,329		6,258		12,587
Present value of lease liabilities	$	65,666	$	34,866	$	100,532

Leases

Leases

The Company leases drilling rigs, facilities (including a water storage facility), vehicles and drilling and compression equipment.

To determine the present value of its right-of-use assets and lease liabilities, the Company calculates a discount rate per lease contract based on an estimate of the rate of interest that the Company would pay to borrow (on a collateralized basis, over a similar term) an amount equal to the lease payment obligation.

The Company has elected a practical expedient to forgo application of the recognition requirements under ASU 2016-02, Leases, to short-term leases; as such, short-term leases are not recorded in the Consolidated Balance Sheets. In addition, the Company has elected a practical expedient to account for lease and nonlease components together as a lease.

Certain of the Company's lease contracts include variable lease payments, such as payments for property taxes and other operating and maintenance expenses and payments based on asset use, which are not included in the lease cost or the present value of the right-of-use asset or lease liability. Certain of the Company's lease contracts provide renewal periods at the Company's option; if a renewal period option is reasonably assured to be exercised, the associated lease payment obligation is included in the present value of the right-of-use asset and lease liability. As of December 31, 2024 and 2023, the Company was not a lessor.

The following table summarizes the Company's lease costs.

	Years Ended December 31,
	2024		2023		2022
	(Thousands)
Operating lease costs	$	41,991	$	26,755	$	19,922
Finance lease costs	5,546		2,414		1,716
Variable and short-term lease costs	33,475		24,151		13,726
Total lease costs (a)	$	81,012	$	53,320	$	35,364

(a)Includes drilling rig lease costs capitalized to property, plant and equipment of $50.5 million, $40.8 million and $25.4 million, respectively, of which $33.1 million, $24.5 million and $17.7 million, respectively, were operating lease costs for the years ended December 31, 2024, 2023 and 2022.

For the years ended December 31, 2024, 2023 and 2022, cash paid for operating lease liabilities and reported in net cash provided by operating activities in the Statements of Consolidated Cash Flows was $13.6 million, $10.1 million and $10.3 million, respectively. For the years ended December 31, 2024, 2023 and 2022, cash paid for finance lease liabilities and reported in net cash used in financing activities in the Statements of Consolidated Cash Flows was $4.2 million, $2.3 million and $1.8 million, respectively.

For the Company's operating leases, as of December 31, 2024, 2023 and 2022, the weighted average remaining term was 3.4 years, 1.6 years and 1.8 years, respectively, and the weighted average discount rate was 5.3%, 4.7% and 4.5%, respectively. For the Company's finance leases, as of December 31, 2024, 2023 and 2022, the weighted average remaining term was 6.8 years, 3.8 years and 3.3 years, respectively, and the weighted average discount rate was 5.1%, 4.8% and 3.9%, respectively.

The Company records its right-of-use assets in other assets and the current and noncurrent portions of its lease liabilities in other current liabilities and other liabilities and credits, respectively, in the Consolidated Balance Sheets. The following table summarizes the Company's right-of-use assets and lease liabilities.

	December 31,
	2024		2023
	(Thousands)
Right-of-Use Assets
Operating	$	60,496	$	42,338
Finance	34,803		6,494
Total right-of-use assets	$	95,299	$	48,832
Lease Liabilities
Current lease liabilities
Operating	$	36,275	$	43,891
Finance	5,603		2,489
Total current lease liabilities	41,878		46,380
Noncurrent lease liabilities
Operating	29,391		8,443
Finance	29,263		3,754
Total noncurrent lease liabilities	58,654		12,197
Total lease liabilities	$	100,532	$	58,577

The following table summarizes the Company's lease payment obligations as of December 31, 2024.

	Operating		Finance		Total
	(Thousands)
2025	$	38,592	$	7,192	$	45,784
2026	8,289		6,420		14,709
2027	7,623		6,057		13,680
2028	6,480		4,806		11,286
2029	5,804		4,523		10,327
Thereafter	5,207		12,126		17,333
Total lease payment obligations	71,995		41,124		113,119
Less: Imputed interest	6,329		6,258		12,587
Present value of lease liabilities	$	65,666	$	34,866	$	100,532