Leases

6 Months Ended

Jun. 30, 2020

Leases [Abstract]

Leases

Leases

We have cancelable and non-cancelable finance and operating lease obligations 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 right-of-use assets (“ROU assets”) and liabilities as of June 30, 2020 and December 31, 2019 and their placement within our condensed consolidated balance sheets:

Lease type	Balance Sheet Location	June 30, 2020			December 31, 2019
Assets
Finance	Property, plant, and equipment	$	13,467		$	11,552
Finance	Accumulated amortization	(5,460		)	(4,447		)
Finance	Property, plant, and equipment, net	$	8,007		$	7,105
Operating	Operating lease right-of-use assets	378,323			420,073
Total right-of-use assets		$	386,330		$	427,178
Liabilities
Current
Finance	Other accrued liabilities	$	1,838		$	1,784
Operating	Operating lease liabilities	61,013			79,999
Long-term
Finance	Finance lease liabilities	7,143			6,227
Operating	Operating lease liabilities	321,393			340,909
Total lease liabilities		$	391,387		$	428,919
Weighted-average remaining lease term (in years)
Finance		5.73			5.69
Operating		10.57			10.26
Weighted-average discount rate
Finance		7.39		%	6.68		%
Operating		7.72		%	7.88		%

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

	Three Months Ended June 30,				Six Months Ended June 30,
Lease cost type	2020		2019		2020		2019
Finance lease cost
Amortization of finance lease ROU assets	$	534	$	402	$	1,014	$	901
Interest on lease liabilities	164		108		331		264
Operating lease cost	27,160		24,566		54,130		47,978
Variable lease cost	1,855		910		4,550		2,540
Short-term lease cost	643		163		842		416
Net lease cost	$	30,356	$	26,149	$	60,867	$	52,099

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

	Six Months Ended June 30,
Lease type	2020		2019
Cash paid for amounts included in the measurement of liabilities
Financing cash flows from finance leases	$	819	$	996
Operating cash flows from finance leases	322		245
Operating cash flows from operating leases	51,179		46,044
Non-cash supplemental amounts
ROU assets obtained in exchange for new finance lease liabilities	1,915		192
ROU assets obtained in exchange for new operating lease liabilities	4,557		14,308
ROU assets terminated in exchange for release from operating lease liabilities	7,738		193

The table below includes the estimated future undiscounted cash flows for finance and operating leases as of June 30, 2020 (in thousands):

For the year ending December 31,	Finance leases			Operating leases			Total
2020 (1)	$	1,369		$	52,562		$	53,931
2021	1,944			68,534			70,478
2022	1,735			67,367			69,102
2023	1,735			53,589			55,324
2024	1,441			43,855			45,296
2025	1,201			42,487			43,688
Thereafter	1,658			200,329			201,987
Total lease payments	11,083			528,723			539,806
Less amount representing interest	(2,102		)	(146,317		)	(148,419		)
Present value of lease liabilities	$	8,981		$	382,406		$	391,387

_________________________________________________________

(1) Represents period from July 1, 2020 to December 31, 2020.

Additionally, the Company has $8.8 million and $1.2 million in future undiscounted cash flows for multiple operating leases and three finance leases that have not yet commenced, respectively. These leases are expected to commence when the lessor has made the equipment or location available to the Company to operate or begin construction, respectively.

Leases

Leases

We have cancelable and non-cancelable finance and operating lease obligations 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 right-of-use assets (“ROU assets”) and liabilities as of June 30, 2020 and December 31, 2019 and their placement within our condensed consolidated balance sheets:

Lease type	Balance Sheet Location	June 30, 2020			December 31, 2019
Assets
Finance	Property, plant, and equipment	$	13,467		$	11,552
Finance	Accumulated amortization	(5,460		)	(4,447		)
Finance	Property, plant, and equipment, net	$	8,007		$	7,105
Operating	Operating lease right-of-use assets	378,323			420,073
Total right-of-use assets		$	386,330		$	427,178
Liabilities
Current
Finance	Other accrued liabilities	$	1,838		$	1,784
Operating	Operating lease liabilities	61,013			79,999
Long-term
Finance	Finance lease liabilities	7,143			6,227
Operating	Operating lease liabilities	321,393			340,909
Total lease liabilities		$	391,387		$	428,919
Weighted-average remaining lease term (in years)
Finance		5.73			5.69
Operating		10.57			10.26
Weighted-average discount rate
Finance		7.39		%	6.68		%
Operating		7.72		%	7.88		%

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

	Three Months Ended June 30,				Six Months Ended June 30,
Lease cost type	2020		2019		2020		2019
Finance lease cost
Amortization of finance lease ROU assets	$	534	$	402	$	1,014	$	901
Interest on lease liabilities	164		108		331		264
Operating lease cost	27,160		24,566		54,130		47,978
Variable lease cost	1,855		910		4,550		2,540
Short-term lease cost	643		163		842		416
Net lease cost	$	30,356	$	26,149	$	60,867	$	52,099

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

	Six Months Ended June 30,
Lease type	2020		2019
Cash paid for amounts included in the measurement of liabilities
Financing cash flows from finance leases	$	819	$	996
Operating cash flows from finance leases	322		245
Operating cash flows from operating leases	51,179		46,044
Non-cash supplemental amounts
ROU assets obtained in exchange for new finance lease liabilities	1,915		192
ROU assets obtained in exchange for new operating lease liabilities	4,557		14,308
ROU assets terminated in exchange for release from operating lease liabilities	7,738		193

The table below includes the estimated future undiscounted cash flows for finance and operating leases as of June 30, 2020 (in thousands):

For the year ending December 31,	Finance leases			Operating leases			Total
2020 (1)	$	1,369		$	52,562		$	53,931
2021	1,944			68,534			70,478
2022	1,735			67,367			69,102
2023	1,735			53,589			55,324
2024	1,441			43,855			45,296
2025	1,201			42,487			43,688
Thereafter	1,658			200,329			201,987
Total lease payments	11,083			528,723			539,806
Less amount representing interest	(2,102		)	(146,317		)	(148,419		)
Present value of lease liabilities	$	8,981		$	382,406		$	391,387

_________________________________________________________

(1) Represents period from July 1, 2020 to December 31, 2020.

Additionally, the Company has $8.8 million and $1.2 million in future undiscounted cash flows for multiple operating leases and three finance leases that have not yet commenced, respectively. These leases are expected to commence when the lessor has made the equipment or location available to the Company to operate or begin construction, respectively.