Leases

9 Months Ended

Sep. 30, 2020

Leases [Abstract]

Leases

LEASES

    We have operating leases for some of our transportation equipment, office space, warehouse space, operating locations, and machinery and equipment. We have finance leases for certain storage tanks and equipment rentals. These finance leases are not material to our financial statements. Our leases have remaining lease terms ranging from 1 to 16 years. Some of our leases have options to extend for various periods, while some have termination options with prior notice of generally 30 days or six months. The office space, warehouse space, operating location leases, and machinery and equipment leases generally require us to pay all maintenance and insurance costs. During the fourth quarter of 2019, CCLP entered into a lease agreement commitment for 14 compressor packages. The leases are for an initial term of seven years and commenced upon the completion of the equipment fabrication. During the first quarter, CCLP took delivery of eight compressor packages. During the second quarter, CCLP took delivery of the remaining six compressor packages. We have no other lease commitments that have not yet commenced that create significant rights and obligations. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Variable rent expense was not material.

    Our corporate headquarters facility located in The Woodlands, Texas, was sold on December 31, 2012, pursuant to a sale and leaseback transaction. As a condition to the completion of the purchase and sale of the facility, the parties entered into a lease agreement for the facility having an initial lease term of 15 years, which is classified as an operating lease. Under the terms of the lease agreement, we have the ability to extend the lease for five successive five-year periods at base rental rates to be determined at the time of each extension.

    Components of lease expense, included in either cost of revenues or general and administrative expense based on the use of the underlying asset, are as follows (inclusive of lease expense for leases not included on our consolidated balance sheet based on our accounting policy election to exclude leases with a term of 12 months or less):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(In Thousands)
Operating lease expense	$	5,822	$	5,075	$	17,839	$	15,106
Short-term lease expense	3,758		9,556		17,061		30,269
Total lease expense	$	9,580	$	14,631	$	34,900	$	45,375

Supplemental cash flow information:

	Nine Months Ended September 30,
	2020		2019
	(In Thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows - operating leases	$	17,861	$	14,868
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	24,201	$	7,631

Supplemental balance sheet information:

	September 30, 2020		December 31, 2019
	(In Thousands)
Operating leases:
Operating lease right-of-use assets	$	78,867	$	68,131
Accrued liabilities and other	$	16,362	$	15,850
Operating lease liabilities	64,200		53,919
Total operating lease liabilities	$	80,562	$	69,769

Additional operating lease information:

	September 30, 2020		December 31, 2019
Weighted average remaining lease term:
Operating leases	6.09 years		6.43 years
Weighted average discount rate:
Operating leases	9.33	%	9.46	%

    Future minimum lease payments by year and in the aggregate, under non-cancellable operating leases with terms in excess of one year consist of the following at September 30, 2020:

		Operating Leases
	(In Thousands)
Remainder of 2020		$	5,809
2021		22,322
2022		18,896
2023		15,803
2024		12,067
Thereafter		32,611
Total lease payments		107,508
Less imputed interest		(26,946)
Total lease liabilities		$	80,562

    At September 30, 2020, future minimum rental receipts under a non-cancellable sublease for office space in one of our locations totaled $5.0 million. For the three and nine months ended September 30, 2020, we recognized sublease income of $0.3 million and $0.9 million.

Leases

LEASES

    We have operating leases for some of our transportation equipment, office space, warehouse space, operating locations, and machinery and equipment. We have finance leases for certain storage tanks and equipment rentals. These finance leases are not material to our financial statements. Our leases have remaining lease terms ranging from 1 to 16 years. Some of our leases have options to extend for various periods, while some have termination options with prior notice of generally 30 days or six months. The office space, warehouse space, operating location leases, and machinery and equipment leases generally require us to pay all maintenance and insurance costs. During the fourth quarter of 2019, CCLP entered into a lease agreement commitment for 14 compressor packages. The leases are for an initial term of seven years and commenced upon the completion of the equipment fabrication. During the first quarter, CCLP took delivery of eight compressor packages. During the second quarter, CCLP took delivery of the remaining six compressor packages. We have no other lease commitments that have not yet commenced that create significant rights and obligations. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Variable rent expense was not material.

    Our corporate headquarters facility located in The Woodlands, Texas, was sold on December 31, 2012, pursuant to a sale and leaseback transaction. As a condition to the completion of the purchase and sale of the facility, the parties entered into a lease agreement for the facility having an initial lease term of 15 years, which is classified as an operating lease. Under the terms of the lease agreement, we have the ability to extend the lease for five successive five-year periods at base rental rates to be determined at the time of each extension.

    Components of lease expense, included in either cost of revenues or general and administrative expense based on the use of the underlying asset, are as follows (inclusive of lease expense for leases not included on our consolidated balance sheet based on our accounting policy election to exclude leases with a term of 12 months or less):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(In Thousands)
Operating lease expense	$	5,822	$	5,075	$	17,839	$	15,106
Short-term lease expense	3,758		9,556		17,061		30,269
Total lease expense	$	9,580	$	14,631	$	34,900	$	45,375

Supplemental cash flow information:

	Nine Months Ended September 30,
	2020		2019
	(In Thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows - operating leases	$	17,861	$	14,868
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	24,201	$	7,631

Supplemental balance sheet information:

	September 30, 2020		December 31, 2019
	(In Thousands)
Operating leases:
Operating lease right-of-use assets	$	78,867	$	68,131
Accrued liabilities and other	$	16,362	$	15,850
Operating lease liabilities	64,200		53,919
Total operating lease liabilities	$	80,562	$	69,769

Additional operating lease information:

	September 30, 2020		December 31, 2019
Weighted average remaining lease term:
Operating leases	6.09 years		6.43 years
Weighted average discount rate:
Operating leases	9.33	%	9.46	%

    Future minimum lease payments by year and in the aggregate, under non-cancellable operating leases with terms in excess of one year consist of the following at September 30, 2020:

		Operating Leases
	(In Thousands)
Remainder of 2020		$	5,809
2021		22,322
2022		18,896
2023		15,803
2024		12,067
Thereafter		32,611
Total lease payments		107,508
Less imputed interest		(26,946)
Total lease liabilities		$	80,562

    At September 30, 2020, future minimum rental receipts under a non-cancellable sublease for office space in one of our locations totaled $5.0 million. For the three and nine months ended September 30, 2020, we recognized sublease income of $0.3 million and $0.9 million.