Leases

9 Months Ended

Sep. 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 September 30, 2020 and December 31, 2019 and their placement within our condensed consolidated balance sheets:

Lease type	Balance Sheet Location	September 30, 2020			December 31, 2019
Assets
Finance	Property, plant, and equipment	$	13,543		$	11,552
Finance	Accumulated amortization	(5,978		)	(4,447		)
Finance	Property, plant, and equipment, net	$	7,565		$	7,105
Operating	Operating lease right-of-use assets	366,029			420,073
Total right-of-use assets		$	373,594		$	427,178
Liabilities
Current
Finance	Other accrued liabilities	$	1,555		$	1,784
Operating	Operating lease liabilities	55,293			79,999
Long-term
Finance	Finance lease liabilities	6,863			6,227
Operating	Operating lease liabilities	315,591			340,909
Total lease liabilities		$	379,302		$	428,919
Weighted-average remaining lease term (in years)
Finance		5.67			5.69
Operating		10.64			10.26
Weighted-average discount rate
Finance		7.45		%	6.68		%
Operating		7.63		%	7.88		%

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

	Three Months Ended September 30,				Nine Months Ended September 30,
Lease cost type	2020		2019		2020		2019
Finance lease cost
Amortization of finance lease ROU assets	$	518	$	479	$	1,532	$	1,380
Interest on lease liabilities	156		128		487		392
Operating lease cost	26,514		24,259		80,644		72,237
Variable lease cost	2,185		2,799		7,842		8,689
Short-term lease cost	820		1,067		1,662		1,483
Net lease cost	$	30,193	$	28,732	$	92,167	$	84,181

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

	Nine Months Ended September 30,
Lease type	2020		2019
Cash paid for amounts included in the measurement of liabilities
Financing cash flows from finance leases	$	1,508	$	1,571
Operating cash flows from finance leases	493		559
Operating cash flows from operating leases	76,536		71,181
Non-cash supplemental amounts
ROU assets obtained in exchange for new finance lease liabilities	1,992		198
ROU assets obtained in exchange for new operating lease liabilities	11,974		15,532
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 September 30, 2020 (in thousands):

For the year ending December 31,	Finance leases			Operating leases			Total
2020 (1)	$	585		$	27,018		$	27,603
2021	1,973			72,824			74,797
2022	1,765			68,123			69,888
2023	1,752			54,228			55,980
2024	1,441			44,478			45,919
2025	1,202			42,907			44,109
Thereafter	1,660			201,059			202,719
Total lease payments	10,378			510,637			521,015
Less amount representing interest	(1,960		)	(139,753		)	(141,713		)
Present value of lease liabilities	$	8,418		$	370,884		$	379,302

_________________________________________________________

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

Additionally, the Company has $8.9 million and $1.1 million in future undiscounted cash flows for operating leases and 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 September 30, 2020 and December 31, 2019 and their placement within our condensed consolidated balance sheets:

Lease type	Balance Sheet Location	September 30, 2020			December 31, 2019
Assets
Finance	Property, plant, and equipment	$	13,543		$	11,552
Finance	Accumulated amortization	(5,978		)	(4,447		)
Finance	Property, plant, and equipment, net	$	7,565		$	7,105
Operating	Operating lease right-of-use assets	366,029			420,073
Total right-of-use assets		$	373,594		$	427,178
Liabilities
Current
Finance	Other accrued liabilities	$	1,555		$	1,784
Operating	Operating lease liabilities	55,293			79,999
Long-term
Finance	Finance lease liabilities	6,863			6,227
Operating	Operating lease liabilities	315,591			340,909
Total lease liabilities		$	379,302		$	428,919
Weighted-average remaining lease term (in years)
Finance		5.67			5.69
Operating		10.64			10.26
Weighted-average discount rate
Finance		7.45		%	6.68		%
Operating		7.63		%	7.88		%

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

	Three Months Ended September 30,				Nine Months Ended September 30,
Lease cost type	2020		2019		2020		2019
Finance lease cost
Amortization of finance lease ROU assets	$	518	$	479	$	1,532	$	1,380
Interest on lease liabilities	156		128		487		392
Operating lease cost	26,514		24,259		80,644		72,237
Variable lease cost	2,185		2,799		7,842		8,689
Short-term lease cost	820		1,067		1,662		1,483
Net lease cost	$	30,193	$	28,732	$	92,167	$	84,181

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

	Nine Months Ended September 30,
Lease type	2020		2019
Cash paid for amounts included in the measurement of liabilities
Financing cash flows from finance leases	$	1,508	$	1,571
Operating cash flows from finance leases	493		559
Operating cash flows from operating leases	76,536		71,181
Non-cash supplemental amounts
ROU assets obtained in exchange for new finance lease liabilities	1,992		198
ROU assets obtained in exchange for new operating lease liabilities	11,974		15,532
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 September 30, 2020 (in thousands):

For the year ending December 31,	Finance leases			Operating leases			Total
2020 (1)	$	585		$	27,018		$	27,603
2021	1,973			72,824			74,797
2022	1,765			68,123			69,888
2023	1,752			54,228			55,980
2024	1,441			44,478			45,919
2025	1,202			42,907			44,109
Thereafter	1,660			201,059			202,719
Total lease payments	10,378			510,637			521,015
Less amount representing interest	(1,960		)	(139,753		)	(141,713		)
Present value of lease liabilities	$	8,418		$	370,884		$	379,302

_________________________________________________________

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

Additionally, the Company has $8.9 million and $1.1 million in future undiscounted cash flows for operating leases and 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.