Leases

12 Months Ended

Dec. 31, 2023

The Company leases drilling rigs, facilities, vehicles and drilling and compression equipment.

To determine the present value of its right-of-use assets and lease liabilities, the Company calculates a discount rate per lease contract based on an estimate of the rate of interest that the Company would pay to borrow (on a collateralized basis, over a similar term) an amount equal to the lease payment obligation.

The Company has elected a practical expedient to forgo application of the recognition requirements under ASU 2016-02, Leases, to short-term leases; as such, short-term leases are not recorded in the Consolidated Balance Sheets. In addition, the Company has elected a practical expedient to account for lease and nonlease components together as a lease.

Certain of the Company's lease contracts include variable lease payments, such as payments for property taxes and other operating and maintenance expenses and payments based on asset use, which are not included in the lease cost or the present value of the right-of-use asset or lease liability. Certain of the Company's lease contracts provide renewal periods at the Company's option; if a renewal period option is reasonably assured to be exercised, the associated lease payment obligation is included in the present value of the right-of-use asset and lease liability. As of December 31, 2023 and 2022, the Company was not a lessor.

The following table summarizes the Company's lease costs.


	Years Ended December 31,
	2023		2022		2021

	(Thousands)
Operating and finance lease costs	$	29,169	$	21,638	$	19,826
Variable and short-term lease costs	24,151		13,726		11,516
Total lease costs (a)	$	53,320	$	35,364	$	31,342

(a)Includes drilling rig lease costs capitalized to property, plant and equipment of $40.8 million, $25.4 million and $22.1 million, respectively, of which $24.5 million, $17.7 million and $16.5 million, respectively, were operating lease costs for the years ended December 31, 2023, 2022 and 2021.

For the years ended December 31, 2023, 2022 and 2021, cash paid for lease liabilities and reported in net cash provided by operating activities in the Statements of Consolidated Cash Flows was $10.1 million, $10.3 million and $9.7 million, respectively. For the years ended December 31, 2023, 2022 and 2021, cash paid for lease liabilities and reported in net cash (used in) provided by financing activities in the Statements of Consolidated Cash Flows was $2.3 million, $1.8 million and $1.1 million, respectively. As of December 31, 2023, 2022 and 2021, the weighted average remaining lease term was 1.8 years, 1.9 years and 2.6 years, respectively. For the years ended December 31, 2023, 2022 and 2021, the weighted average discount rate was 4.7%, 4.4% and 2.9%, respectively.

The Company records its right-of-use assets in other assets and the current and noncurrent portions of its lease liabilities in other current liabilities and other liabilities and credits, respectively, in the Consolidated Balance Sheets. As of December 31, 2023 and 2022, total right-of-use assets were $48.8 million and $29.2 million, respectively, and total lease liabilities were $58.6 million and $48.0 million, respectively, of which $46.4 million and $35.4 million, respectively, were classified as current.

The following table summarizes the Company's lease payment obligations as of December 31, 2023.


	December 31, 2023

	(Thousands)
2024	$	47,865
2025	7,805
2026	2,459
2027	1,742
2028	1,102
Thereafter	415
Total lease payment obligations	61,388
Less: Interest	2,811
Present value of lease liabilities	$	58,577