Leases

12 Months Ended

Dec. 31, 2019

Leases [Abstract]

LEASES

Note 8 - Leases

On January 1, 2019, we adopted Topic 842. Results for reporting periods beginning January 1, 2019 are presented in accordance with Topic 842, while prior period amounts are reported in accordance with Topic 840 – Leases. On January 1, 2019, we recognized approximately $7.7 million in right-of-use assets and approximately $7.7 million in lease liabilities, representing the present value of minimum payment obligations associated with compressor, vehicle, and office space operating leases with non-cancellable lease terms in excess of one year. We do not have any finance leases, nor are we the lessor in any leasing arrangements. We have elected certain practical expedients available under Topic 842 including those that permit us to (i) account for lease and non-lease components in our contracts as a single lease component for all asset classes; (ii) not evaluate existing and expired land easements; (iii) not apply the recognition requirements of Topic 842 to leases with a lease term of twelve months or less; and (iv) retain our existing lease assessment and classification. As such, there was no cumulative-effect adjustment to retained earnings required at January 1, 2019.

The lease amounts disclosed herein are presented on a gross basis. A portion of these costs may have been or will be billed to other working interest owners, and our net share of these costs, once paid, are or will be included in lease operating expenses, pipeline operating expenses or general and administrative expenses, as applicable.

Our right-of-use assets and lease liabilities are recognized at their discounted present value on the balance sheet. All leases recognized on our consolidated balance sheet as of December 31, 2019 are classified as operating leases, which include leases related to the asset classes reflected in the table below:

(in thousands)	Right-of-Use Assets		Lease Liability
Compressors	$	3,282	$	3,282
Corporate leases		2,065		2,083
Vehicles		757		643
Total	$	6,104	$	6,008

We recognize lease expense on a straight-line basis excluding short-term and variable lease payments which are recognized as incurred. Short-term lease cost represents payments for leases with a lease term of twelve months or less, excluding leases with a term of one month or less. Short-term leases include certain compressors and vehicles that have a non-cancellable lease term of less than one year.

The following table summarizes the components of our gross operating lease costs incurred during the year ended December 31, 2019:

(in thousands)	Amount
Operating lease cost	$	2,116
Short-term lease cost		629
Total lease cost	$	2,745

We do not have any leases with an implicit interest rate that can be readily determined. As a result, we calculate collateralized incremental borrowing rates to use as discount rates. We utilize the benchmark rates defined in our credit facilities, and adjust for facility utilization and term considerations, to establish collateralized incremental borrowing rates.

Our weighted-average lease term and discount rate used are as follows:

	December 31, 2019
Weighted-average lease term (years)		3.59
Weighted-average discount rate		6.4	%

The following table summarizes supplemental cash flow information related to operating leases: 

(in thousands)	Year Ended December 31, 2019
Cash paid for operating leases	$	2,212
Right-of-use assets obtained in exchange for operating lease obligations	$	465

Minimum future commitments by year for our long-term operating leases as of December 31, 2019 are presented in the table below. Such commitments are reflected at undiscounted values and are reconciled to the discounted present value recognized on the balance sheet as follows:

(in thousands)	Amount
2020	$	1,960
2021		1,902
2022		1,704
2023		1,157
2024		11
Thereafter		-
Total future minimum lease payments	$	6,734
Less: imputed interest		(726	)
Total lease liabilities	$	6,008