On January 1, 2019, the Company adopted the new lease guidance under Topic 842, Leases, using the modified retrospective approach to each lease that existed at the date of initial application as well as leases entered into after that date. The Company has elected to report all leases at the beginning of the period of adoption and not restate its comparative periods. This standard does not apply to leases to explore for or use minerals, oil, natural gas and similar non-regenerative resources, including the intangible right to

explore for those natural resources and rights to use the land in which those natural resources are contained.

The Company has entered into operating leases for operating locations, corporate offices and certain operating equipment. These leases have remaining lease terms of 1 month to 9 years as of March 31, 2019. Currently, the Company does not have any finance leases. The Company has elected the short-term lease recognition practical expedient whereby right of use assets and lease liabilities are not recognized for leasing arrangements with an initial term of less than one year.

Topic 842 requires that lessees and lessors discount lease payments at the lease commencement date using the rate implicit in the lease, if available, or the lessee’s incremental borrowing rate. The Company uses the implicit rate when readily determinable. If the implicit rate is not readily determinable, the Company uses its incremental borrowing rate based on the information available at the commencement date in the determination of the present value of future lease payments.

The Company has elected to adopt the following practical expedients upon the transition date to Topic 842 on January 1, 2019:

	a)	The entity need not reassess whether any expired or existing contracts are or contains leases;
	b)	The entity need not reassess the lease classification for expired or existing contracts;
	c)	The entity need not reassess initial direct costs for any existing leases.

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Use of portfolio approach: An entity can apply this guidance to a portfolio of leases with similar characteristics if the entity reasonably expects that the application of the leases model to the portfolio would not differ materially from the application of the leases model to the individual leases in that portfolio. This approach can also be applied to other aspects of the leases guidance for which lessees/lessors need to make judgments and estimates, such as determining the discount rate and determining and reassessing the lease term.

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Lease and non-lease components: As a practical expedient, lease and non-lease components may be combined where the revenue recognition pattern is the same and where the lease component, when accounted for separately, would be considered an operating lease. The Company’s contract drilling, pressure pumping and directional drilling contracts contain a lease component related to the underlying equipment utilized, in addition to the service component provided by the Company’s crews and expertise to operate the related equipment. The Company has concluded that the non-lease service of operating its equipment and providing expertise in the services provided to our customers is predominant in the Company’s drilling, pressure pumping and directional drilling contracts. With the election of this practical expedient, the Company will continue to present a single performance obligation for these contracts under the revenue guidance in ASC 606.

Lease expense consisted of the following for the three months ended March 31, 2019 (in thousands):

	Three Months Ended
	March 31,
	2019
Operating lease cost	$	3,039
Short-term lease expense (1)		276
Total lease expense	$	3,315

(1)	Short-term lease expense represents expense related to leases with a contract term of one year or less.

Supplemental cash flow information related to leases for the three months ended March 31, 2019 is as follows (in thousands):

	Three Months Ended
	March 31,
	2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	2,728

Right of use assets obtained in exchange for lease obligations:
Operating leases	$	-

Supplemental balance sheet information related to leases as of March 31, 2019 is as follows:

	March 31,
	2019
Weighted Average Remaining Lease Term:
Operating leases	5.0 years

Weighted Average Discount Rate:
Operating leases		4.4	%

Maturities of operating lease liabilities as of March 31, 2019 are as follows (in thousands):

Year ending December 31,
2019 (excluding the three months ended March 31, 2019)	$	8,062
2020		9,188
2021		6,661
2022		4,622
2023		2,663
Thereafter		6,552
Total lease payments		37,748
Less imputed interest		(4,628	)
Total	$	33,120

Maturities of operating lease liabilities as of December 31, 2018, as previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, are as follows (in thousands):

Year ending December 31,
2019	$	11,408
2020		9,069
2021		6,543
2022		4,625
2023		2,663
Thereafter		6,552
Total	$	40,860