LEASES

12 Months Ended

Dec. 31, 2021

Operating Leases. We are a lessee through noncancellable lease agreements for property and equipment consisting primarily of office space, land, vehicles, and equipment used in both our operations and administrative functions. In September 2021, we entered into an operating lease agreement for our headquarters office space which generated right of use assets and liabilities at lease inception of $8.4 million.

The following table sets forth the maturities of our operating lease liabilities as of December 31, 2021:


	Amount
	(In thousands)
Ending December 31,
2022	$	4,382
2023	3,321
2024	2,683
2025	2,081
2026	1,484
2027 and beyond	50
Total future payments	14,001
Less: Interest	1,533
Present value of future minimum operating lease payments	12,468
Less: Current portion	3,791
Total long-term operating lease payments	$	8,677

Weighted average remaining lease term (years)	3.8
Weighted average discount rate (1)	5.54		%

_______________________

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.

Finance Leases. During 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 4.0% and the underlying assets are included in gas gathering and processing equipment. Superior purchased the leased assets for $3.0 million in May 2021.

Information about the operating and finance lease assets and liabilities on our consolidated balance sheets as of December 31, 2021 and 2020 is as follows:


		Successor		Successor
	Balance Sheet Classification	December 31, 2021		December 31, 2020
		(In thousands)
Assets
Operating lease right of use assets	Right of use assets	$	12,445	$	5,592
Finance lease right of use assets	Property and equipment, net	—		7,281
Total lease right of use assets		$	12,445	$	12,873

Liabilities
Current liabilities:
Operating lease liabilities	Current operating lease liabilities	$	3,791	$	4,075
Finance lease liabilities	Current portion of other long-term liabilities	—		3,216
Non-current liabilities:
Operating lease liabilities	Operating lease liabilities	8,677		1,445

Total lease liabilities		$	12,468	$	8,736

The following table presents the components of total lease cost for our operating and finance leases during the periods indicated:


	Successor				Predecessor
	Year Ended December 31, 2021		Four Months Ended December 31, 2020		Eight Months Ended August 31, 2020
	(In thousands)
Components of total lease cost:
Amortization of finance leased assets	$	1,248	$	1,406	$	2,757
Interest on finance lease liabilities	33		54		165
Operating lease cost	4,546		1,331		3,604
Short-term lease cost (1)	12,898		3,664		8,190
Variable lease cost	—		64		223
Total lease cost	$	18,725	$	6,519	$	14,939

1.Short-term lease cost includes amounts capitalized related to our oil and natural gas segment of $1.5 million, $0.2 million, and $1.5 million for the year ended December 31, 2021, the four months ended December 31, 2020, and the eight months ended August 31, 2020, respectively.

The following table provides supplemental cash flow information related to our operating and finance leases during the periods indicated:


	Successor				Predecessor
	Year Ended December 31, 2021		Four Months Ended December 31, 2020		Eight Months Ended August 31, 2020
	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	4,605	$	1,489	$	3,849
Financing cash flows for finance leases	3,216		1,406		2,757
Lease liabilities recognized in exchange for new operating lease right of use assets	$	8,745	$	—	$	—