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Leases
 9 Months Ended
Sep. 30, 2019
Leases [Abstract]  
Leases Leases
As discussed in Note 2 — Summary of Significant Accounting Policies, the Company adopted ASC 842 as of January 1, 2019 using the modified retrospective method, which resulted in the Company recognizing operating lease ROU assets and lease liabilities of $31.1 million and $37.1 million, respectively. In addition, the Company recognized offsetting finance lease ROU assets and lease liabilities of $6.0 million. There was no impact to the opening equity balance as a result of adoption as the difference between the asset and liability balance is attributable to reclassifications of pre-existing balances, such as deferred rent, into the lease asset balance. Prior period amounts are not adjusted and continue to be reported in accordance with the previous guidance, Accounting Standards Codification 840 (“ASC 840”).
In accordance with the adoption of ASC 842, management determines whether an arrangement is a lease at its inception. The Company’s operating and finance leases consist primarily of office space, drilling rigs, vehicles and other property and equipment used in its operations. The operating lease ROU asset also includes any lease incentives received in the recognition of the present value of future lease payments. The Company considers renewal and termination options in determining the lease term used to establish its ROU assets and lease liabilities to the extent the Company is reasonably certain to exercise the renewal or termination. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. 
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 future lease payments. The Company has
determined their respective incremental borrowing rates based upon the rate of interest that would have been paid on a collateralized basis over similar tenors to that of the leases.
The following table sets forth the Company’s components of lease costs for the periods presented:
Three Months Ended September 30, 2019Nine Months Ended September 30, 2019
 (In thousands)
Operating lease costs$4,986  $23,461  
Variable lease costs(1)
1,730  6,733  
Short-term lease costs1,048  2,418  
Finance lease costs:
Amortization of ROU assets694  1,910  
Interest on lease liabilities72  196  
Total lease costs$8,530  $34,718  
___________________
(1)Based on payments made by the Company to lessors for the right to use an underlying asset that vary because of changes in circumstances occurring after the commencement date, other than the passage of time, such as property taxes, operating and maintenance costs.
The amounts disclosed herein include costs associated with properties operated by the Company that are presented on a gross basis and do not reflect the Company’s net proportionate share of such amounts. A portion of these costs have been or will be billed to other working interest owners.
The Company’s share of operating, variable and short-term lease costs are either capitalized and included in property, plant and equipment on the Company’s Condensed Consolidated Balance Sheets or are recognized in the Company’s Condensed Consolidated Statements of Operations in lease operating expenses, midstream expenses and general and administrative expenses, as applicable. The finance lease costs for the amortization of ROU assets and the interest on lease liabilities disclosed above are included in depreciation, depletion and amortization and interest expense, net of capitalized interest, respectively, on the Company’s Condensed Consolidated Statements of Operations.
As of September 30, 2019, maturities of the Company’s lease liabilities are as follows:
Operating LeasesFinance Leases
 (In thousands)
2019 (excluding the nine months ended September 30, 2019)$3,232  $729  
20207,080  2,909  
20212,704  2,136  
20223,073  1,367  
20232,365  274  
Thereafter12,802  684  
Total future lease payments$31,256  $8,099  
Less: Imputed interest4,111  652  
Present value of future lease payments$27,145  $7,447  
As of December 31, 2018, future minimum annual rental commitments under non-cancelable leases under ASC 840 were as follows:
 (In thousands)
2019$8,723  
20207,009  
20216,005  
20225,130  
20234,361  
Thereafter13,134  
Total future minimum lease payments$44,362  
Supplemental balance sheet information related to the Company’s leases are as follows:
Balance Sheet LocationSeptember 30, 2019
 (In thousands)
Assets
Operating lease assetsOperating right-of-use assets$21,255  
Finance lease assets(1)
Other assets7,406  
Total lease assets$28,661  
Liabilities
Current
Operating lease liabilitiesCurrent operating lease liabilities$8,050  
Finance lease liabilitiesOther current liabilities2,698  
Long-term
Operating lease liabilitiesOperating lease liabilities19,095  
Finance lease liabilitiesOther liabilities4,748  
Total lease liabilities$34,591  
___________________
(1)Finance lease ROU assets are recorded net of accumulated amortization of $1.9 million as of September 30, 2019.
Supplemental cash flow information and non-cash transactions related to the Company’s leases are as follows:
September 30, 2019
 (In thousands)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases$24,985  
Operating cash flows from finance leases196  
Financing cash flows from finance leases1,423  
ROU assets obtained in exchange for lease obligations
Operating leases$12,746  
Finance leases3,427  
Weighted-average remaining lease terms and discount rates for the Company’s leases are as follows:
As of September 30, 2019
Operating Leases
Weighted average remaining lease term6.7 years
Weighted average discount rate3.6 %
Finance Leases
Weighted average remaining lease term4.1 years
Weighted average discount rate3.8 %
Leases Leases
As discussed in Note 2 — Summary of Significant Accounting Policies, the Company adopted ASC 842 as of January 1, 2019 using the modified retrospective method, which resulted in the Company recognizing operating lease ROU assets and lease liabilities of $31.1 million and $37.1 million, respectively. In addition, the Company recognized offsetting finance lease ROU assets and lease liabilities of $6.0 million. There was no impact to the opening equity balance as a result of adoption as the difference between the asset and liability balance is attributable to reclassifications of pre-existing balances, such as deferred rent, into the lease asset balance. Prior period amounts are not adjusted and continue to be reported in accordance with the previous guidance, Accounting Standards Codification 840 (“ASC 840”).
In accordance with the adoption of ASC 842, management determines whether an arrangement is a lease at its inception. The Company’s operating and finance leases consist primarily of office space, drilling rigs, vehicles and other property and equipment used in its operations. The operating lease ROU asset also includes any lease incentives received in the recognition of the present value of future lease payments. The Company considers renewal and termination options in determining the lease term used to establish its ROU assets and lease liabilities to the extent the Company is reasonably certain to exercise the renewal or termination. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. 
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 future lease payments. The Company has
determined their respective incremental borrowing rates based upon the rate of interest that would have been paid on a collateralized basis over similar tenors to that of the leases.
The following table sets forth the Company’s components of lease costs for the periods presented:
Three Months Ended September 30, 2019Nine Months Ended September 30, 2019
 (In thousands)
Operating lease costs$4,986  $23,461  
Variable lease costs(1)
1,730  6,733  
Short-term lease costs1,048  2,418  
Finance lease costs:
Amortization of ROU assets694  1,910  
Interest on lease liabilities72  196  
Total lease costs$8,530  $34,718  
___________________
(1)Based on payments made by the Company to lessors for the right to use an underlying asset that vary because of changes in circumstances occurring after the commencement date, other than the passage of time, such as property taxes, operating and maintenance costs.
The amounts disclosed herein include costs associated with properties operated by the Company that are presented on a gross basis and do not reflect the Company’s net proportionate share of such amounts. A portion of these costs have been or will be billed to other working interest owners.
The Company’s share of operating, variable and short-term lease costs are either capitalized and included in property, plant and equipment on the Company’s Condensed Consolidated Balance Sheets or are recognized in the Company’s Condensed Consolidated Statements of Operations in lease operating expenses, midstream expenses and general and administrative expenses, as applicable. The finance lease costs for the amortization of ROU assets and the interest on lease liabilities disclosed above are included in depreciation, depletion and amortization and interest expense, net of capitalized interest, respectively, on the Company’s Condensed Consolidated Statements of Operations.
As of September 30, 2019, maturities of the Company’s lease liabilities are as follows:
Operating LeasesFinance Leases
 (In thousands)
2019 (excluding the nine months ended September 30, 2019)$3,232  $729  
20207,080  2,909  
20212,704  2,136  
20223,073  1,367  
20232,365  274  
Thereafter12,802  684  
Total future lease payments$31,256  $8,099  
Less: Imputed interest4,111  652  
Present value of future lease payments$27,145  $7,447  
As of December 31, 2018, future minimum annual rental commitments under non-cancelable leases under ASC 840 were as follows:
 (In thousands)
2019$8,723  
20207,009  
20216,005  
20225,130  
20234,361  
Thereafter13,134  
Total future minimum lease payments$44,362  
Supplemental balance sheet information related to the Company’s leases are as follows:
Balance Sheet LocationSeptember 30, 2019
 (In thousands)
Assets
Operating lease assetsOperating right-of-use assets$21,255  
Finance lease assets(1)
Other assets7,406  
Total lease assets$28,661  
Liabilities
Current
Operating lease liabilitiesCurrent operating lease liabilities$8,050  
Finance lease liabilitiesOther current liabilities2,698  
Long-term
Operating lease liabilitiesOperating lease liabilities19,095  
Finance lease liabilitiesOther liabilities4,748  
Total lease liabilities$34,591  
___________________
(1)Finance lease ROU assets are recorded net of accumulated amortization of $1.9 million as of September 30, 2019.
Supplemental cash flow information and non-cash transactions related to the Company’s leases are as follows:
September 30, 2019
 (In thousands)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases$24,985  
Operating cash flows from finance leases196  
Financing cash flows from finance leases1,423  
ROU assets obtained in exchange for lease obligations
Operating leases$12,746  
Finance leases3,427  
Weighted-average remaining lease terms and discount rates for the Company’s leases are as follows:
As of September 30, 2019
Operating Leases
Weighted average remaining lease term6.7 years
Weighted average discount rate3.6 %
Finance Leases
Weighted average remaining lease term4.1 years
Weighted average discount rate3.8 %