Leases

6 Months Ended

Jun. 30, 2021

LEASESLease Agreements. We lease certain office space, land, and equipment, including pipeline equipment and office equipment. Our lease payments are generally straight-line and the exercise of lease renewal options, which vary in term, is at our sole discretion. We include renewal periods in our lease term if we are reasonably certain to exercise available renewal options. Our operating lease agreements do not include options to purchase the leased property.

The following table sets forth the maturity of our operating lease liabilities as of June 30, 2021:


	Amount
	(In thousands)
Ending June 30,
2022	$	3,686
2023	1,528
2024	1,271
2025	86
2026	12
2027 and beyond	57
Total future payments	6,640
Less: Interest	269
Present value of future minimum operating lease payments	6,371
Less: Current portion	3,515
Total long-term operating lease payments	$	2,856

Finance Leases under ASC 842

In 2014, Superior entered into finance lease agreements for 20 compressors with initial terms of seven years and an option to purchase the assets at 10% of their then fair market value at the end of the term. These finance leases were discounted using annual rates of 4.00% and the underlying assets were included in gas gathering and processing equipment. In May 2021, Superior purchased the leased assets for $3.0 million.

The following table shows information about our lease assets and liabilities on our unaudited condensed consolidated balance sheets:


	Classification on the unaudited condensed consolidated balance sheets	June 30, 2021		December 31, 2020
		(In thousands)
Assets
Operating right of use assets	Right of use assets	$	6,406	$	5,592
Finance right of use assets	Property, plant, and equipment, net	—		7,281
Total right of use assets		$	6,406	$	12,873

Liabilities
Current liabilities:
Operating lease liabilities	Current operating lease liabilities	$	3,515	$	4,075
Finance lease liabilities	Current portion of other long-term liabilities	—		3,216
Non-current liabilities:
Operating lease liabilities	Operating lease liabilities	2,856		1,445
Finance lease liabilities	Other long-term liabilities	—		—
Total lease liabilities		$	6,371	$	8,736

The following table shows certain information related to the lease costs for our finance and operating leases for the periods indicated:



	Successor		Predecessor		Successor		Predecessor
	Three Months Ended June 30, 2021		Three Months Ended June 30, 2020		Six Months Ended June 30, 2021		Six Months Ended June 30, 2020
	(In thousands)
Components of total lease cost:
Amortization of finance leased assets	$	181	$	1,036	$	1,248	$	2,061
Interest on finance lease liabilities	4		60		33		130
Operating lease cost	984		1,395		2,011		2,640
Short-term lease cost (1)	3,179		2,751		5,771		6,742
Variable lease cost	—		83		—		165
Total lease cost	$	4,348	$	5,325	$	9,063	$	11,737

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1.Short-term lease cost includes amounts capitalized related to our oil and natural gas segment of $0.1 million, $0.4 million, $0.2 million, and $1.4 million for the three and six months ended June 30, 2021 and June 30, 2020, respectively.

The following table shows supplemental cash flow information related to leases for the periods indicated:


	Successor		Predecessor
	Six Months Ended June 30, 2021		Six Months Ended June 30, 2020
	(In thousands)
Cash paid for amounts in the measurement of lease liabilities:
Operating cash flows for operating leases	$	2,063	$	2,827
Financing cash flows for finance leases	$	3,216	$	2,061

The following table shows certain information related to the weighted average remaining lease terms and the weighted average discount rates for our operating and finance leases:

Weighted Average Remaining Lease Term

Weighted Average Discount

Rate (1)

(In years)

Operating leases

2.4

3.81%

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1.Our weighted average discount rates represent the rate implicit in the lease or our incremental borrowing rate for a term equal to the remaining term of the lease.