Annual report pursuant to Section 13 and 15(d)

Leases

v3.22.4
Leases
 12 Months Ended
Dec. 31, 2022
Leases [Abstract]  
Leases Leases
The Company currently has leases associated with contracts for office space, drilling rigs, and the use of well equipment, vehicles, information technology infrastructure, and other office equipment. The tables below, which present the components of lease costs and supplemental balance sheet information, are presented on a gross basis. Other joint owners in the properties operated by the Company generally pay for their working interest share of costs associated with drilling rigs and well equipment.
The table below presents the components of the Company’s lease costs for the year ended December 31, 2022.
Years Ended December 31,
2022 2021 2020
(In thousands)
Components of Lease Costs
Finance lease costs $228  $277  $1,489 
Amortization of right-of-use assets (1)
203  237  1,348 
Interest on lease liabilities (2)
25  40  141 
Operating lease cost (3)
38,803  37,734  46,888 
Impairment of Operating lease ROU assets (4)
—  —  3,575 
Short-term lease cost (5)
19,426  347  1,821 
Variable lease costs (6)
2,098  284  259 
Total lease costs $60,555  $38,642  $54,032 
(1)Included as a component of “Depreciation, depletion and amortization” in the consolidated statements of operations.
(2)Included as a component of “Interest expense, net of capitalized amounts” in the consolidated statements of operations.
(3)For the years ended December 31, 2022, 2021 and 2020, approximately $33.3 million, $23.0 million and $34.2 million, respectively, are costs associated with drilling rigs. These costs were capitalized to “Evaluated properties, net” in the consolidated balance sheets and the other remaining operating lease costs were components of “General and administrative” and “Lease operating” in the consolidated statements of operations.
(4)As a result of the downturn in economic conditions in conjunction with the Company’s ongoing effort to consolidate various office locations due to the Carrizo Acquisition, the Company evaluated certain of its office leases for impairment. Upon evaluation, the Company recorded impairments of certain of its operating lease ROU assets for the year ended December 31, 2020 of $3.6 million, which are a component of “Merger, integration and transaction expenses” in the consolidated statements of operations.
(5)Short-term lease cost primarily consists of drilling rigs with contract terms of less than one year.
(6)Variable lease costs include additional payments that were not included in the initial measurement of the lease liability and related ROU asset for lease agreements with terms greater than 12 months. Variable lease costs primarily consist of incremental usage associated with drilling rigs.
The table below presents supplemental balance sheet information for the Company’s operating leases. The Company’s financing leases are immaterial.
As of December 31,
2022 2021
(In thousands)
Leases
Operating leases:
Operating lease ROU assets $47,018  $23,884 
Current operating lease liabilities $40,809  $17,599 
Long-term operating lease liabilities 21,882  23,547 
Total operating lease liabilities $62,691  $41,146 
The table below presents the weighted average remaining lease terms and weighted average discounts rates for the Company’s leases as of December 31, 2022.
December 31, 2022
Weighted Average Remaining Lease Terms (In years)
Operating leases 3.0
Financing leases 1.2
Weighted Average Discount Rate
Operating leases 6.2  %
Financing leases 6.6  %
The table below presents the maturity of the Company’s lease liabilities as of December 31, 2022.
Operating Leases Financing Leases
(In thousands)
2023 $43,158  $233 
2024 6,815  39 
2025 4,366  — 
2026 3,805  — 
2027 3,846  — 
Thereafter 6,488  — 
   Total lease payments 68,478  272 
Less imputed interest (5,787) (12)
   Total lease liabilities $62,691  $260 
Leases Leases
The Company currently has leases associated with contracts for office space, drilling rigs, and the use of well equipment, vehicles, information technology infrastructure, and other office equipment. The tables below, which present the components of lease costs and supplemental balance sheet information, are presented on a gross basis. Other joint owners in the properties operated by the Company generally pay for their working interest share of costs associated with drilling rigs and well equipment.
The table below presents the components of the Company’s lease costs for the year ended December 31, 2022.
Years Ended December 31,
2022 2021 2020
(In thousands)
Components of Lease Costs
Finance lease costs $228  $277  $1,489 
Amortization of right-of-use assets (1)
203  237  1,348 
Interest on lease liabilities (2)
25  40  141 
Operating lease cost (3)
38,803  37,734  46,888 
Impairment of Operating lease ROU assets (4)
—  —  3,575 
Short-term lease cost (5)
19,426  347  1,821 
Variable lease costs (6)
2,098  284  259 
Total lease costs $60,555  $38,642  $54,032 
(1)Included as a component of “Depreciation, depletion and amortization” in the consolidated statements of operations.
(2)Included as a component of “Interest expense, net of capitalized amounts” in the consolidated statements of operations.
(3)For the years ended December 31, 2022, 2021 and 2020, approximately $33.3 million, $23.0 million and $34.2 million, respectively, are costs associated with drilling rigs. These costs were capitalized to “Evaluated properties, net” in the consolidated balance sheets and the other remaining operating lease costs were components of “General and administrative” and “Lease operating” in the consolidated statements of operations.
(4)As a result of the downturn in economic conditions in conjunction with the Company’s ongoing effort to consolidate various office locations due to the Carrizo Acquisition, the Company evaluated certain of its office leases for impairment. Upon evaluation, the Company recorded impairments of certain of its operating lease ROU assets for the year ended December 31, 2020 of $3.6 million, which are a component of “Merger, integration and transaction expenses” in the consolidated statements of operations.
(5)Short-term lease cost primarily consists of drilling rigs with contract terms of less than one year.
(6)Variable lease costs include additional payments that were not included in the initial measurement of the lease liability and related ROU asset for lease agreements with terms greater than 12 months. Variable lease costs primarily consist of incremental usage associated with drilling rigs.
The table below presents supplemental balance sheet information for the Company’s operating leases. The Company’s financing leases are immaterial.
As of December 31,
2022 2021
(In thousands)
Leases
Operating leases:
Operating lease ROU assets $47,018  $23,884 
Current operating lease liabilities $40,809  $17,599 
Long-term operating lease liabilities 21,882  23,547 
Total operating lease liabilities $62,691  $41,146 
The table below presents the weighted average remaining lease terms and weighted average discounts rates for the Company’s leases as of December 31, 2022.
December 31, 2022
Weighted Average Remaining Lease Terms (In years)
Operating leases 3.0
Financing leases 1.2
Weighted Average Discount Rate
Operating leases 6.2  %
Financing leases 6.6  %
The table below presents the maturity of the Company’s lease liabilities as of December 31, 2022.
Operating Leases Financing Leases
(In thousands)
2023 $43,158  $233 
2024 6,815  39 
2025 4,366  — 
2026 3,805  — 
2027 3,846  — 
Thereafter 6,488  — 
   Total lease payments 68,478  272 
Less imputed interest (5,787) (12)
   Total lease liabilities $62,691  $260