Leases

12 Months Ended

Dec. 31, 2021

Leases [Abstract]

Leases

9. Leases

We are a lessee under various agreements for drilling rigs, compressors, vehicles, office space and gas treating plants. As of December 31, 2021, these leases have remaining terms ranging from one month to three years. Certain of our lease agreements include options to renew the lease, terminate the lease early or purchase the underlying asset at the end of the lease. We determine the lease term at the lease commencement date as the non-cancelable period of the lease, including options to extend or terminate the lease when we are reasonably certain to exercise the option. The company’s vehicles are the only leases with renewal options that we are reasonably certain to exercise. The renewals are reflected in the ROU asset and lease liability balances.

Our operating ROU assets are included in other long-term assets while operating lease liabilities are included in other current and other long-term liabilities on the consolidated balance sheet. Finance ROU assets are reflected in total property and equipment, net, while finance lease liabilities are included in other current and other long-term liabilities on the consolidated balance sheet.

On November 1, 2021, we acquired Vine and, as part of the purchase price allocation, we recognized additional operating lease liabilities of $32 million and a related ROU asset of $32 million related to drilling rig leases, an office space lease and gas treating plant leases.

On February 1, 2019, we acquired WildHorse and, as part of the purchase price allocation, we recognized additional operating lease liabilities of $40 million, a related ROU asset of $38 million, and lease incentives of $2 million related to two office space leases, a long-term hydraulic fracturing agreement and other equipment leases. Regarding our long-term hydraulic fracturing agreements, we made a policy election to treat both lease and non-lease components as a single lease component. All of these acquired leases were approved for rejection during our bankruptcy process and subsequently removed from our balance sheet.

In 2018, we sold our wholly owned subsidiary, Midcon Compression, L.L.C., to a third party and subsequently leased back certain natural gas compressors for 38 months. The lease was accounted for as a finance lease liability until the contract was renegotiated as part of our bankruptcy process and the changes to the contract resulted in the reclassification of the finance lease as an operating lease in March 2021.

The following table presents our ROU assets and lease liabilities as of December 31, 2021 and 2020.

	Successor				Predecessor
	December 31, 2021				December 31, 2020
	Finance		Operating		Finance		Operating
ROU assets	$	—	$	38	$	9	$	29
Lease liabilities:
Current lease liabilities	$	—	$	29	$	9	$	27
Long-term lease liabilities	—		9		—		2
Total lease liabilities	—		38		9		29
Less amounts reclassified to liabilities subject to compromise	—		—		(9)		(5)
Total lease liabilities, net	$	—	$	38	$	—	$	24

Additional information for the Company’s operating and finance leases is presented below:

	Successor		Predecessor
	Period from February 10, 2021 through December 31, 2021		Period from January 1, 2021 through February 9, 2021		Year Ended December 31, 2020		Year Ended December 31, 2019
Lease cost:
Amortization of ROU assets	$	—	$	1	$	9	$	8
Interest on lease liability	—		—		1		2
Finance lease cost	—		1		10		10
Operating lease cost	33		3		17		26
Short-term lease cost	13		—		32		112
Total lease cost	$	46	$	4	$	59	$	148
Other information:
Operating cash outflows from finance lease	$	—	$	—	$	1	$	2
Operating cash outflows from operating leases	$	7	$	—	$	9	$	11
Investing cash outflows from operating leases	$	39	$	3	$	40	$	127
Financing cash outflows from finance lease	$	—	$	1	$	9	$	8

	Successor		Predecessor
	December 31, 2021		December 31, 2020
Weighted average remaining lease term - finance lease	N/A		1.00 year
Weighted average remaining lease term - operating leases	1.44 years		1.12 years
Weighted average discount rate - finance lease	N/A		7.50	%
Weighted average discount rate - operating leases	3.80	%	6.46	%

Maturity analysis of operating lease liabilities are presented below:

	Successor
	December 31, 2021
2022	$	29
2023	8
2024	1
Total lease payments	38
Less imputed interest	—
Present value of lease liabilities	38
Less current maturities	(29)
Present value of lease liabilities, less current maturities	$	9

Leases

9. Leases

We are a lessee under various agreements for drilling rigs, compressors, vehicles, office space and gas treating plants. As of December 31, 2021, these leases have remaining terms ranging from one month to three years. Certain of our lease agreements include options to renew the lease, terminate the lease early or purchase the underlying asset at the end of the lease. We determine the lease term at the lease commencement date as the non-cancelable period of the lease, including options to extend or terminate the lease when we are reasonably certain to exercise the option. The company’s vehicles are the only leases with renewal options that we are reasonably certain to exercise. The renewals are reflected in the ROU asset and lease liability balances.

Our operating ROU assets are included in other long-term assets while operating lease liabilities are included in other current and other long-term liabilities on the consolidated balance sheet. Finance ROU assets are reflected in total property and equipment, net, while finance lease liabilities are included in other current and other long-term liabilities on the consolidated balance sheet.

On November 1, 2021, we acquired Vine and, as part of the purchase price allocation, we recognized additional operating lease liabilities of $32 million and a related ROU asset of $32 million related to drilling rig leases, an office space lease and gas treating plant leases.

On February 1, 2019, we acquired WildHorse and, as part of the purchase price allocation, we recognized additional operating lease liabilities of $40 million, a related ROU asset of $38 million, and lease incentives of $2 million related to two office space leases, a long-term hydraulic fracturing agreement and other equipment leases. Regarding our long-term hydraulic fracturing agreements, we made a policy election to treat both lease and non-lease components as a single lease component. All of these acquired leases were approved for rejection during our bankruptcy process and subsequently removed from our balance sheet.

In 2018, we sold our wholly owned subsidiary, Midcon Compression, L.L.C., to a third party and subsequently leased back certain natural gas compressors for 38 months. The lease was accounted for as a finance lease liability until the contract was renegotiated as part of our bankruptcy process and the changes to the contract resulted in the reclassification of the finance lease as an operating lease in March 2021.

The following table presents our ROU assets and lease liabilities as of December 31, 2021 and 2020.

	Successor				Predecessor
	December 31, 2021				December 31, 2020
	Finance		Operating		Finance		Operating
ROU assets	$	—	$	38	$	9	$	29
Lease liabilities:
Current lease liabilities	$	—	$	29	$	9	$	27
Long-term lease liabilities	—		9		—		2
Total lease liabilities	—		38		9		29
Less amounts reclassified to liabilities subject to compromise	—		—		(9)		(5)
Total lease liabilities, net	$	—	$	38	$	—	$	24

Additional information for the Company’s operating and finance leases is presented below:

	Successor		Predecessor
	Period from February 10, 2021 through December 31, 2021		Period from January 1, 2021 through February 9, 2021		Year Ended December 31, 2020		Year Ended December 31, 2019
Lease cost:
Amortization of ROU assets	$	—	$	1	$	9	$	8
Interest on lease liability	—		—		1		2
Finance lease cost	—		1		10		10
Operating lease cost	33		3		17		26
Short-term lease cost	13		—		32		112
Total lease cost	$	46	$	4	$	59	$	148
Other information:
Operating cash outflows from finance lease	$	—	$	—	$	1	$	2
Operating cash outflows from operating leases	$	7	$	—	$	9	$	11
Investing cash outflows from operating leases	$	39	$	3	$	40	$	127
Financing cash outflows from finance lease	$	—	$	1	$	9	$	8

	Successor		Predecessor
	December 31, 2021		December 31, 2020
Weighted average remaining lease term - finance lease	N/A		1.00 year
Weighted average remaining lease term - operating leases	1.44 years		1.12 years
Weighted average discount rate - finance lease	N/A		7.50	%
Weighted average discount rate - operating leases	3.80	%	6.46	%

Maturity analysis of operating lease liabilities are presented below:

	Successor
	December 31, 2021
2022	$	29
2023	8
2024	1
Total lease payments	38
Less imputed interest	—
Present value of lease liabilities	38
Less current maturities	(29)
Present value of lease liabilities, less current maturities	$	9