NOTE

10—Leases

We adopted ASU

2016

02,

Leases

, during the quarter ended

March 31, 2019,

and we elected the transition relief package of practical expedients. We determine if an arrangement is or contains a lease at inception. Leases with an initial term of

months or less are

not

recorded on our Consolidated Balance Sheets. We lease our corporate office building in Houston, Texas. We recognize lease expense for this lease on a straight-line basis over the lease term. This operating lease is included in furniture, fixtures and equipment and other capital assets, accrued liabilities and other non-current liabilities on our Consolidated Balance Sheets. The operating lease asset and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term. As this lease did

not

provide an implicit rate, we used a collateralized incremental borrowing rate based on the information available at commencement date, including lease term, in determining the present value of future payments. The operating lease asset includes any lease payments made but excludes annual operating charges. Operating lease expense is recognized on a straight-line basis over the lease term and reported in general and administrative operating expense on our Consolidated Statements of Operations. We have also entered into leases for certain vehicles and other equipment which are immaterial to our financial statements and have therefore

not

been recorded on our Consolidated Balance Sheets.

The lease cost components for the

three

months ended

March 31, 2019

are classified as follows:

(in thousands)	March 31, 2019		Consolidated Statements of Operations Classification
Building lease cost	$	353	General and administrative expense
Variable lease cost (1)		47	General and administrative expense
	$	400

(

) Includes building operating expenses.

The following are additional details related to our lease portfolio as of

March 31, 2019:

(in thousands)	March 31, 2019			Consolidated Balance Sheets Classification
Lease asset, gross	$	2,922		Furniture, fixtures and equipment and other capital assets
Accumulated depreciation	$	(285	)	Accumulated depletion, depreciation and amortization
Lease asset, net	$	2,637

Current lease liability		1,332		Accrued liabilities
Non-current lease liability		1,871		Other non-current liabilities
Total lease liabilities	$	3,203

The following table presents operating lease liability maturities as of

March 31, 2019:

(in thousands)	March 31, 2019
2019	$	1,155
2020		1,540
2021		813
2022		-
2023		-
Thereafter		-
Total lease payments	$	3,508
Less imputed interest		305
Present value of lease liabilities	$	3,203

The future minimum obligations under operating leases in effect as of

December 31, 2018

having a noncancelable term in excess of

one

year as determined prior to the adoption of ASU

842

are as follows:

(in thousands)	December 31, 2018
2019	$	3,753
2020		1,556
2021		513
2022		-
2023		-
Thereafter		-
Future minimum lease obligations	$	5,822

As of

March 31, 2019,

our office building operating lease has a weighted-average remaining lease term of

2.1

years and a weighted-average discount rate of

8.0

percent. Cash paid for amounts included in the measurement of operating lease liabilities was

$0.4

million for the

three

months ended

March 31, 2019.