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Leases | 6 Months Ended
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Jun. 30, 2019
Leases [Abstract] |
Leases | Leases We are a lessee under various agreements for compressors, office space, vehicles and other equipment. As of June 30, 2019, these leases have remaining terms ranging from one month to 7.5 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. Upon adoption of ASC 842 on January 1, 2019, we recognized a nominal operating lease liability and a nominal related ROU asset related to vehicles we lease. 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 $2 million related to two office space leases, a long-term hydraulic fracturing agreement and other equipment leases. Regarding our long-term hydraulic fracturing agreements, we made a policy election to treat both lease and non-lease components as a single lease component. In 2018, we sold our wholly owned subsidiary, Midcon Compression, L.L.C., to a third party and subsequently leased back some natural gas compressors for 38 months. The lease is accounted for as a finance lease liability. The following table presents our ROU assets and lease liabilities as of June 30, 2019.
|  | Financing |  | Operating
|  | ($ in millions)
ROU assets |  | $ | 22 |  |  | $ | 25 |
Lease liabilities: |  |  |  |
Current lease liabilities |  | $ | 9 |  |  | $ | 12 |
Long-term lease liabilities |  | 13 |  |  | 15 |
Total lease liabilities |  | $ | 22 |  |  | $ | 27 |
Additional information for the Company’s operating and finance leases is presented below:
|  | Three Months Ended June 30, 2019 |  | Six Months Ended June 30, 2019
Lease cost: |  | ($ in millions)
Amortization of ROU assets |  | $ | 2 |  |  | $ | 4 |
Interest on lease liability |  | — |  |  | 1 |
Finance lease cost |  | 2 |  |  | 5 |
Operating lease cost |  | 10 |  |  | 17 |
Short-term lease cost |  | 26 |  |  | 48 |
Total lease cost(a) |  | $ | 38 |  |  | $ | 70 |
Other information: |  |  |  |
Operating cash outflows from finance lease |  | $ | — |  |  | $ | 1 |
Operating cash outflows from operating leases |  | $ | 3 |  |  | $ | 5 |
Investing cash outflows from operating leases |  | $ | 33 |  |  | $ | 60 |
Financing cash outflows from finance lease |  | $ | 2 |  |  | $ | 4 |
Weighted-average remaining lease term - finance lease |  |  |  |  | 2.50 years |
Weighted-average remaining lease term - operating leases |  |  |  |  | 4.50 years |
Weighted-average discount rate - finance lease |  |  |  |  | 7.50 | %
Weighted-average discount rate - operating leases |  |  |  |  | 4.83 | %
____________________________________________
(a) | Includes $33 million and $60 million of capitalized lease costs for the Current Quarter and the Current Period, respectively.
Maturity analysis of finance lease liabilities and operating lease liabilities are presented below:
|  | June 30, 2019
|  | Financing Lease |  | Operating Leases
|  | ($ in millions)
Remainder of 2019 |  | $ | 5 |  |  | $ | 8 |
2020 |  | 10 |  |  | 8 |
2021 |  | 10 |  |  | 3 |
2022 |  | — |  |  | 2 |
2023 |  | — |  |  | 2 |
Thereafter |  | — |  |  | 7 |
Total lease payments |  | 25 |  |  | 30 |
Less imputed interest |  | (3 | ) |  | (3 | )
Present value of lease liabilities |  | 22 |  |  | 27 |
Less current maturities |  | (9 | ) |  | (12 | )
Present value of lease liabilities, less current maturities |  | $ | 13 |  |  | $ | 15 |
The aggregate undiscounted minimum future lease payments under previous lease accounting standard, ASC 840, are presented below:
|  | December 31, 2018
|  | Capital Lease |  | Operating Leases
|  | ($ in millions)
2019 |  | $ | 10 |  |  | $ | 3 |
2020 |  | 10 |  |  | 1 |
2021 |  | 10 |  |  | — |
Total minimum lease payments |  | $ | 30 |  |  | $ | 4 |
Leases | Leases We are a lessee under various agreements for compressors, office space, vehicles and other equipment. As of June 30, 2019, these leases have remaining terms ranging from one month to 7.5 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. Upon adoption of ASC 842 on January 1, 2019, we recognized a nominal operating lease liability and a nominal related ROU asset related to vehicles we lease. 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 $2 million related to two office space leases, a long-term hydraulic fracturing agreement and other equipment leases. Regarding our long-term hydraulic fracturing agreements, we made a policy election to treat both lease and non-lease components as a single lease component. In 2018, we sold our wholly owned subsidiary, Midcon Compression, L.L.C., to a third party and subsequently leased back some natural gas compressors for 38 months. The lease is accounted for as a finance lease liability. The following table presents our ROU assets and lease liabilities as of June 30, 2019.
|  | Financing |  | Operating
|  | ($ in millions)
ROU assets |  | $ | 22 |  |  | $ | 25 |
Lease liabilities: |  |  |  |
Current lease liabilities |  | $ | 9 |  |  | $ | 12 |
Long-term lease liabilities |  | 13 |  |  | 15 |
Total lease liabilities |  | $ | 22 |  |  | $ | 27 |
Additional information for the Company’s operating and finance leases is presented below:
|  | Three Months Ended June 30, 2019 |  | Six Months Ended June 30, 2019
Lease cost: |  | ($ in millions)
Amortization of ROU assets |  | $ | 2 |  |  | $ | 4 |
Interest on lease liability |  | — |  |  | 1 |
Finance lease cost |  | 2 |  |  | 5 |
Operating lease cost |  | 10 |  |  | 17 |
Short-term lease cost |  | 26 |  |  | 48 |
Total lease cost(a) |  | $ | 38 |  |  | $ | 70 |
Other information: |  |  |  |
Operating cash outflows from finance lease |  | $ | — |  |  | $ | 1 |
Operating cash outflows from operating leases |  | $ | 3 |  |  | $ | 5 |
Investing cash outflows from operating leases |  | $ | 33 |  |  | $ | 60 |
Financing cash outflows from finance lease |  | $ | 2 |  |  | $ | 4 |
Weighted-average remaining lease term - finance lease |  |  |  |  | 2.50 years |
Weighted-average remaining lease term - operating leases |  |  |  |  | 4.50 years |
Weighted-average discount rate - finance lease |  |  |  |  | 7.50 | %
Weighted-average discount rate - operating leases |  |  |  |  | 4.83 | %
____________________________________________
(a) | Includes $33 million and $60 million of capitalized lease costs for the Current Quarter and the Current Period, respectively.
Maturity analysis of finance lease liabilities and operating lease liabilities are presented below:
|  | June 30, 2019
|  | Financing Lease |  | Operating Leases
|  | ($ in millions)
Remainder of 2019 |  | $ | 5 |  |  | $ | 8 |
2020 |  | 10 |  |  | 8 |
2021 |  | 10 |  |  | 3 |
2022 |  | — |  |  | 2 |
2023 |  | — |  |  | 2 |
Thereafter |  | — |  |  | 7 |
Total lease payments |  | 25 |  |  | 30 |
Less imputed interest |  | (3 | ) |  | (3 | )
Present value of lease liabilities |  | 22 |  |  | 27 |
Less current maturities |  | (9 | ) |  | (12 | )
Present value of lease liabilities, less current maturities |  | $ | 13 |  |  | $ | 15 |
The aggregate undiscounted minimum future lease payments under previous lease accounting standard, ASC 840, are presented below:
|  | December 31, 2018
|  | Capital Lease |  | Operating Leases
|  | ($ in millions)
2019 |  | $ | 10 |  |  | $ | 3 |
2020 |  | 10 |  |  | 1 |
2021 |  | 10 |  |  | — |
Total minimum lease payments |  | $ | 30 |  |  | $ | 4 |

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- Definition The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=77888251 + Details
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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=77888251 + Details
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