Leases

12 Months Ended

Dec. 31, 2023

Note 12 – Leases

As of December 31, 2023, and 2022, the Company had operating leases for asset classes that include office space, office equipment, drilling rigs, midstream agreements, vehicles, and equipment rentals used in field operations. For operating leases recorded on the accompanying balance sheets, remaining lease terms range from less than one year to approximately nine years. Certain leases contain optional extension periods that allow for terms to be extended for up to an additional 10 years, however in order to maintain financial and operational flexibility, there are no available options to extend that the Company is reasonably certain it will exercise. An early termination option exists for certain leases, some of which allow the Company to terminate a lease within one year, however, there are no leases in which material early termination options are reasonably certain to be exercised by the Company. As of December 31, 2023, and 2022, the Company did not have any agreements in place that were classified as finance leases under Topic 842. As of December 31, 2023, and through the filing of this report, the Company has no material lease arrangements which are scheduled to commence in the future. Please refer to Note 1 – Summary of Significant Accounting Policies for additional information on the Company’s policies for lease determination and classification.

The following table reflects the components of the Company’s total lease costs, whether capitalized or expensed, related to operating leases, including short-term leases, and variable lease payments made for both short-term and long-term leases for the years ended December 31, 2023, and 2022. This total does not reflect amounts that may be reimbursed by other third parties in the normal course of business, such as non-operating working interest owners.


	For the Years Ended December 31,
	2023		2022

	(in thousands)
Operating lease cost	$	15,625	$	10,174
Short-term lease cost (1)	251,628		175,098
Variable lease cost (2)	11,838		7,085
Total lease cost	$	279,091	$	192,357

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(1) Costs associated with short-term lease agreements relate primarily to operational activities where underlying lease terms are less than one year. This amount includes drilling and completion activities and field equipment rentals, most of which are contracted for 12 months or less. It is expected that this amount will fluctuate primarily with the number of drilling rigs and completion crews the Company is operating under short-term agreements.

(2) Variable lease payments relate to the actual usage associated with drilling rigs, completion crews, and vehicles, and variable utility costs associated with the Company’s leased office space. Fluctuations in variable lease payments are primarily driven by the number of drilling rigs and completion crews operating.

Cash paid for amounts included in the measurement of lease liabilities for the years ended December 31, 2023, and 2022, were as follows:


	For the Years Ended December 31,
	2023		2022

	(in thousands)
Operating cash flows related to operating leases	$	4,181	$	4,718
Investing cash flows related to operating leases	$	11,300	$	5,042

Maturities for the Company’s operating lease liabilities included on the accompanying balance sheets as of December 31, 2023, were as follows:


	As of December 31, 2023
	(in thousands)
2024	$	17,208
2025	11,242
2026	4,793
2027	2,685
2028	2,054
Thereafter	6,906
Total Lease payments	$	44,888
Less: Imputed interest (1)	(5,110)
Total	$	39,778

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(1) The weighted-average discount rate used to determine the operating lease liability as of December 31, 2023, was 6.2 percent.

The following table presents supplemental accompanying balance sheet information for operating leases as of December 31, 2023, and 2022:


	As of December 31,
	2023		2022

	(in thousands, except discount rate and lease term)
Balance sheet classifications of operating leases:
Other noncurrent assets	$	32,264	$	26,368
Other current liabilities	$	15,425	$	10,114
Other noncurrent liabilities	$	24,352	$	23,621

ROU assets obtained in exchange for operating lease liabilities	$	19,341	$	16,186
Weighted-average discount rate	6.2%		5.8%
Weighted-average remaining lease term (years)	4		5