Leases

12 Months Ended

Dec. 31, 2024

Note T – Leases

Nature of Leases

The Company has entered into various operating and financial 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 16 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 the 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	2024		2023
Operating lease 1, 2	Lease operating expenses	$	411,303	$	246,721
Operating lease 2	Transportation, gathering and processing	16,117		37,797
Operating lease 2	Selling and general expenses	10,990		9,859
Operating lease 2	Other operating expense	6,622		675
Operating lease 2	Exploration expenses	38,974		110,577

Operating lease 2	Property, plant and equipment	277,170		204,595
Operating lease 2	Asset retirement obligations	10		57,442
Finance lease
Amortization of asset	Depreciation, depletion and amortization	855		1,505
Interest on lease liabilities	Interest expense, net	193		221
Sublease income	Other income	(1,143)		(1,402)
Net lease expense		$	761,091	$	667,990

1 Variable lease expenses. For the years ended December 31, 2024 and 2023, includes variable lease expenses of $42.3 million and $36.7 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, 2024, includes $236.4 million in lease operating expenses, $13.0 million for “Transportation, gathering and processing”, $38.5 million for “Exploration expenses, including undeveloped lease amortization”, $0.8 million in “Selling and general expenses”, $6.2 million in “Other operating expense”, $97.1 million in “Property, plant and equipment, net” and nil 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, 2023, includes $78.2 million in lease operating expenses, $29.4 million in “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.

Maturity of Lease Liabilities


(Thousands of dollars)	Operating Leases		Finance Leases		Total
2025	$	290,474	$	1,257	$	291,731
2026	123,487		1,257		124,744
2027	66,521		1,257		67,778
2028	59,398		1,257		60,655
2029	56,849		456		57,305
Remaining	406,450		927		407,377
Total future minimum lease payments	1,003,179		6,411		1,009,590
Less imputed interest	(212,590)		(1,534)		(214,124)
Present value of lease liabilities 1	$	790,589	$	4,877	$	795,466

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

Lease Term and Discount Rate


	December 31, 2024		December 31, 2023
Weighted average remaining lease term:
Operating leases	8 years		10 years
Finance leases	6 years		5 years
Weighted average discount rate:
Operating leases	5.7	%	5.9	%
Finance leases	4.9	%	4.7	%

Other Information


	Year Ended December 31,
(Thousands of dollars)	2024		2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	328,847	$	271,488
Operating cash flows from finance leases	311		221
Financing cash flows from finance leases	665		622
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases ¹	$	349,312	$	5,923

1 For the year ended December 31, 2024, right-of-use assets obtained in exchange for lease liabilities primarily includes $254.1 million related to the extension of an operating lease pertaining to a drill ship used in our U.S. Offshore business and $52.7 million pertaining to two drilling rigs and several natural gas compressor units at our U.S. Onshore business. December 31, 2023 includes $4.5 million related to natural gas compressor units at various U.S. Onshore locations.

Leases