Leases

12 Months Ended

Dec. 31, 2023

Note T – Leases

Nature of Leases

The Company has entered into various operating leases such as a natural gas processing plant, floating production storage and off-take vessels, buildings, marine vessels, vehicles, drilling rigs, pipelines and other oil and natural gas field equipment.

Remaining lease terms range from 1 year to 17 years, some of which may include options to extend leases for multi-year periods and others which include options to terminate the leases within 1 month.

Options to extend lease terms are at the Company’s discretion. Early lease terminations are a combination of Company discretion and mutual agreement between the Company and lessor. Purchase options also exist for certain leases.

Related Expenses

Expenses related to finance and operating leases included in the Consolidated Financial Statements are as follows:


		Year Ended December 31,
(Thousands of dollars)	Financial Statement Category	2023		2022
Operating lease 1, 2	Lease operating expenses	$	246,721	$	217,038
Operating lease 2	Transportation, gathering and processing	37,797		39,669
Operating lease 2	Selling and general expense	9,859		8,003
Operating lease 2	Other operating expense	675		510
Operating lease 2	Exploration expenses	110,577		10,019

Operating lease 2	Property, plant and equipment	204,595		196,829
Operating lease 2	Asset retirement obligations	57,442		11,190
Finance lease
Amortization of asset	Depreciation, depletion and amortization	1,505		5,481
Interest on lease liabilities	Interest expense, net	221		254
Sublease income	Other income	(1,402)		(1,296)
Net lease expense		$	667,990	$	487,697

1 Variable lease expenses. For the years ended December 31, 2023 and 2022, includes variable lease expenses of $36.7 million and $32.2 million, respectively, primarily related to additional volumes processed at a natural gas processing plant.

2 Short-term leases due within 12 months. For the year ended December 31, 2023, includes $78.2 million in LOE, $29.4 million for “Transportation, gathering and processing”, $80.3 million for “Exploration expenses, including undeveloped lease amortization”, $1.6 million in “Selling and general expenses”, $0.3 million in “Other operating expense”, $112.7 million in “Property, plant and equipment, net” and $57.4 million in “Asset retirement obligations” relating to short-term leases due within 12 months. Expenses primarily relate to drilling rigs and other oil and natural gas field equipment. For the year ended December 31, 2022, includes $62.8 million in LOE, $31.5 million in “Transportation, gathering and processing”, $8.8 million for “Exploration expenses, including undeveloped lease amortization, $0.7 million in “Selling and general expenses", $0.1 million in “Other operating expense”, $125.4 million in “Property, plant and equipment, net” and $11.2 million in “Asset retirement obligations” relating to short-term leases due within 12 months. Expenses primarily relate to drilling rigs and other oil and natural gas field equipment.

Maturity of Lease Liabilities


(Thousands of dollars)	Operating Leases		Finance Leases		Total
2024	$	244,622	$	1,069	$	245,691
2025	82,596		1,069		83,665
2026	63,703		1,069		64,772
2027	62,066		1,069		63,135
2028	61,229		1,069		62,298
Remaining	499,501		265		499,766
Total future minimum lease payments	1,013,717		5,610		1,019,327
Less imputed interest	(254,032)		(1,372)		(255,404)
Present value of lease liabilities 1	$	759,685	$	4,238	$	763,923

1 Includes both the current and long-term portion of the lease liabilities.

Lease Term and Discount Rate


	December 31, 2023		December 31, 2022
Weighted average remaining lease term:
Operating leases	10 years		9 years
Finance leases	5 years		6 years
Weighted average discount rate:
Operating leases	5.9	%	5.9	%
Finance leases	4.7	%	4.7	%

Other Information


	Year Ended December 31,
(Thousands of dollars)	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	271,488	$	212,061
Operating cash flows from finance leases	221		254
Financing cash flows from finance leases	622		636
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases ¹	$	5,923	$	262,669

1 For the year ended December 31, 2023, right-of-use assets obtained in exchange for lease liabilities primarily includes $4.5 million related to natural gas compressor units at various U.S. Onshore locations. December 31, 2022 includes $254.0 million related to an offshore drilling rig with a lease term of 24 months.

Leases