Quarterly report pursuant to Section 13 or 15(d)

LEASES

v3.24.3
LEASES
 9 Months Ended
Sep. 30, 2024
Leases [Abstract]  
LEASES LEASES
Nature of Leases
The Company has operating leases on certain equipment with remaining lease durations in excess of one year. The Company recognizes a right-of-use asset and lease liability on the balance sheet for all leases with lease terms of greater than one year. Short-term leases that have an initial term of one year or less are not capitalized.
The Company has entered into contracts for drilling rigs with varying terms with third parties to ensure operational continuity, cost control and rig availability in its operations. The Company has concluded its drilling rig contracts are operating leases as the assets are identifiable and the Company has the right to control the identified assets. At September 30, 2024, the Company had one active long-term drilling rig contract.
The Company rents office space for its corporate headquarters, field locations and certain other equipment from third parties, which expire at various dates through 2026. These agreements are typically structured with non-cancelable terms of one year to five years. The Company has determined these agreements represent operating leases with a lease term that equals the primary non-cancelable contract term. The Company has included any renewal options that it has determined are reasonably certain of exercise in the determination of the lease terms.
Discount Rate
As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company's incremental borrowing rate reflects the estimated rate of interest that it would pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.
Future amounts due under operating lease liabilities as of September 30, 2024 were as follows (in thousands):
Remaining 2024 $ 2,652 
2025 5,721 
2026 561 
2027 10 
2028 — 
Total lease payments $ 8,944 
Less: imputed interest (277)
Total $ 8,667 
Lease costs incurred for the three and nine months ended September 30, 2024 and 2023, consisted of the following (in thousands):
Three Months Ended September 30, 2024 Three Months Ended September 30, 2023
Operating lease cost $ 3,403  $ 3,443 
Variable lease cost —  — 
Short-term lease cost 4,834  5,112 
Total lease cost(1)
$ 8,237  $ 8,555 

Nine Months Ended September 30, 2024 Nine Months Ended September 30, 2023
Operating lease cost $ 10,209  $ 10,329 
Variable lease cost —  — 
Short-term lease cost 20,783  22,410 
Total lease cost(1)
$ 30,992  $ 32,739 
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(1)    The majority of the Company's total lease cost was capitalized to the full cost pool, and the remainder was included in either lease operating expenses or general and administrative expenses in the accompanying consolidated statements of operations.
The weighted-average remaining lease term as of September 30, 2024 was 0.81 years. The weighted-average discount rate used to determine the operating lease liability as of September 30, 2024 was 6.56%.