Leases Leases

12 Months Ended

Dec. 31, 2019

We have cancelable and non-cancelable finance and operating lease liabilities for the lease of land, vehicles, office space, retail facilities, and other facilities used in the storage and transportation of crude oil and refined products. Most of our leases include one or more options to renew, with renewal terms that can extend the lease term from one to 30 years or more. There are no material lease arrangements where we are the lessor and no material residual value guarantees associated with any of our leases.

The following table provides information on the amounts (in thousands, except lease term and discount rates) of our leased assets and liabilities as of December 31, 2019 and their placement within our consolidated balance sheets:



Lease type	Balance Sheet Location	December 31, 2019
Assets
Finance	Property, plant, and equipment	$	11,552
Finance	Accumulated amortization	(4,447		)
Finance	Property, plant, and equipment, net	$	7,105
Operating	Operating lease assets	420,073
Total leased assets		$	427,178

Liabilities
Current
Finance	Other accrued liabilities	$	1,784
Operating	Operating lease liabilities	79,999
Long-term
Finance	Finance lease liabilities	6,227
Operating	Operating lease liabilities	340,909
Total lease liabilities		$	428,919

Weighted-average remaining lease term (in years)
Finance		5.69
Operating		10.26
Weighted-average discount rate
Finance		6.68		%
Operating		7.88		%

The following table summarizes the lease costs recognized on our consolidated statement of operations (in thousands):



Lease cost type	Year Ended December 31, 2019
Finance lease cost
Amortization of finance lease assets	$	1,896
Interest on lease liabilities	521
Operating lease cost	100,384
Variable lease cost	11,663
Short-term lease cost	1,874
Net lease cost	$	116,338

The following table summarizes the supplemental cash flow information related to leases as follows (in thousands):



Lease type	Year Ended December 31, 2019
Cash paid for amounts included in the measurement of liabilities
Financing cash flows from finance leases	$	2,167
Operating cash flows from finance leases	507
Operating cash flows from operating leases	99,713
Non-cash supplemental amounts
ROU assets obtained in exchange for new finance lease liabilities	963
ROU assets obtained in exchange for new operating lease liabilities	79,382

The table below includes the estimated future undiscounted cash flows for finance and operating leases as of December 31, 2019 (in thousands):



For the year ending December 31,	Finance leases			Operating leases			Total
2020	$	2,247		$	109,727		$	111,974
2021	1,593			69,091			70,684
2022	1,376			66,859			68,235
2023	1,345			53,088			54,433
2024	1,058			43,337			44,395
Thereafter	2,004			240,988			242,992
Total lease payments	9,623			583,090			592,713
Less amount representing interest	(1,612		)	(162,182		)	(163,794		)
Present value of lease liabilities	$	8,011		$	420,908		$	428,919

Additionally, we have $9.0 million and $1.2 million in future undiscounted cash flows for three operating leases and three finance leases, respectively, that have not yet commenced. These leases are expected to commence when the lessor has made the equipment or location available to us to operate or begin construction, respectively.

Due to the transition method elected, information presented prior to January 1, 2019 has not been restated for ASC 842 and continues to be reported under the accounting standards in effect for the period. As of December 31, 2018, we had capital lease obligations related primarily to the leases of 17 retail stations. Most capital leases included one or more options to renew, with renewal terms that could extend the lease term from one to 15 years or more. Certain leases included escalation clauses and/or purchase options. Additionally, as of December 31, 2018, we had various cancelable and noncancelable operating leases related to land, vehicles, office and retail facilities, railcars, barges, and other facilities used in the storage, transportation, and sale of crude oil and refined products. We had operating leases for most of our retail stations with an average of eight years remaining and generally contained renewal options and escalation clauses. Leases for facilities used in the storage, transportation, and sale of crude oil and refined products had various expiration dates extending to 2044. Rent expense for the years ended December 31, 2018 and 2017 was approximately $41.6 million and $41.2 million, respectively.

At December 31, 2018, the estimated minimum lease payments for capital and operating leases with initial or remaining non-cancelable lease terms in excess of one year were as follows (in thousands):



	Capital leases			Operating leases
2019	$	2,723		$	62,589
2020	2,264			62,132
2021	1,757			39,821
2022	1,512			38,402
2023	1,148			38,827
Thereafter	2,600			191,717
Total minimum rental payments	$	12,004		$	433,488
Less amount representing interest	(1,865		)
Present value of minimum rental payments	$	10,139

Leases



Lease type	Balance Sheet Location	December 31, 2019
Assets
Finance	Property, plant, and equipment	$	11,552
Finance	Accumulated amortization	(4,447		)
Finance	Property, plant, and equipment, net	$	7,105
Operating	Operating lease assets	420,073
Total leased assets		$	427,178

Liabilities
Current
Finance	Other accrued liabilities	$	1,784
Operating	Operating lease liabilities	79,999
Long-term
Finance	Finance lease liabilities	6,227
Operating	Operating lease liabilities	340,909
Total lease liabilities		$	428,919

Weighted-average remaining lease term (in years)
Finance		5.69
Operating		10.26
Weighted-average discount rate
Finance		6.68		%
Operating		7.88		%

The following table summarizes the lease costs recognized on our consolidated statement of operations (in thousands):



Lease cost type	Year Ended December 31, 2019
Finance lease cost
Amortization of finance lease assets	$	1,896
Interest on lease liabilities	521
Operating lease cost	100,384
Variable lease cost	11,663
Short-term lease cost	1,874
Net lease cost	$	116,338

The following table summarizes the supplemental cash flow information related to leases as follows (in thousands):



Lease type	Year Ended December 31, 2019
Cash paid for amounts included in the measurement of liabilities
Financing cash flows from finance leases	$	2,167
Operating cash flows from finance leases	507
Operating cash flows from operating leases	99,713
Non-cash supplemental amounts
ROU assets obtained in exchange for new finance lease liabilities	963
ROU assets obtained in exchange for new operating lease liabilities	79,382

The table below includes the estimated future undiscounted cash flows for finance and operating leases as of December 31, 2019 (in thousands):



For the year ending December 31,	Finance leases			Operating leases			Total
2020	$	2,247		$	109,727		$	111,974
2021	1,593			69,091			70,684
2022	1,376			66,859			68,235
2023	1,345			53,088			54,433
2024	1,058			43,337			44,395
Thereafter	2,004			240,988			242,992
Total lease payments	9,623			583,090			592,713
Less amount representing interest	(1,612		)	(162,182		)	(163,794		)
Present value of lease liabilities	$	8,011		$	420,908		$	428,919

At December 31, 2018, the estimated minimum lease payments for capital and operating leases with initial or remaining non-cancelable lease terms in excess of one year were as follows (in thousands):



	Capital leases			Operating leases
2019	$	2,723		$	62,589
2020	2,264			62,132
2021	1,757			39,821
2022	1,512			38,402
2023	1,148			38,827
Thereafter	2,600			191,717
Total minimum rental payments	$	12,004		$	433,488
Less amount representing interest	(1,865		)
Present value of minimum rental payments	$	10,139