Leases

12 Months Ended

Dec. 31, 2020

LEASES

As part of the Montage Merger, the Company acquired $25 million of operating right of use assets and corresponding lease liabilities which were recognized as part of the Company’s acquisition accounting in the fourth quarter of 2020.

In July 2019, the Company terminated its existing lease agreement and entered into a new ten-year lease agreement for a smaller portion of the headquarters office building, which resulted in the Company making a $6 million residual value guarantee short-fall payment to the building’s previous lessor. The Company’s variable lease costs are primarily comprised of variable operating charges incurred in connection with the new building lease which are expected to continue throughout the lease term. There are currently no material residual value guarantees in the Company’s existing leases.

The components of lease costs are shown below:


	For the years ended December 31,
(in millions)	2020		2019
Operating lease cost	$	48	$	45
Short-term lease cost	35		45
Variable lease cost	3		1
Total lease cost	$	86	$	91

As of December 31, 2020, the Company had operating leases of $6 million, related primarily to compressor leases, that have been executed but not yet commenced. These operating leases are planned to commence during 2021 with lease terms expiring through 2024. The Company’s existing operating leases do not contain any material restrictive covenants.

Supplemental cash flow information related to leases is set forth below:


	For the years ended December 31,
(in millions)	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	47	$	47

Right-of-use assets obtained in exchange for operating liabilities:
Operating leases	$	48	$	95

Supplemental balance sheet information related to leases is as follows:


(in millions)	December 31, 2020			December 31, 2019
Right-of-use asset balance:
Operating leases	$	163		$	159
Lease liability balance:
Current operating leases	$	42		$	34
Long-term operating leases	117			119
Total operating leases	$	159		$	153

Weighted average remaining lease term: (years)
Operating leases	5.6			6.6

Weighted average discount rate:
Operating leases	5.97		%	5.33		%

Maturity analysis of operating lease liabilities:


(in millions)	December 31, 2020
2021	$	50
2022	37
2023	26
2024	18
2025	14
Thereafter	42
Total undiscounted lease liability	187
Imputed interest	(28)
Total discounted lease liability	$	159