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Leases

3 Months Ended

Mar. 31, 2020

7. Leases

Operating Leases

We determine if an arrangement is a lease at inception. Following ASC 842, we determine lease classification and recognize ROU assets and liabilities on the lease commencement date based on the present value of lease payments over the lease term. As the discount rate implicit in the lease is rarely readily determinable, we estimate our incremental borrowing rate using information available at commencement date in determining the present value of the lease payments. The lease term includes options to extend when we are reasonably certain to exercise the option. Short-term leases, those with an initial term of 12 months or less, are not recorded on the balance sheet. Variable costs such as our proportionate share of actual costs for utilities, common area maintenance, property taxes and insurance are not included in the lease liability and are recognized in the period in which they are incurred. Operating lease expense for lease payments is recognized on a straight-line basis over the term of the lease.

The facility leases discussed below, of which we are the lessee, contain lease and nonlease components for which we have elected to account for as a single lease component, as the nonlease components are not significant to the total consideration of the contract and separating the nonlease component would have no effect on lease classification. As it relates to our contract operations services agreements in which we are the lessor, the services nonlease component is predominant over the compression package lease component and therefore recognition of these agreements will continue to follow the ASC 606 Revenue guidance.

We have operating leases and subleases for office space, temporary housing, storage and shops. Our leases have remaining lease terms of less than one year to 11 years and most include options to extend the lease term, at our discretion, for an additional three to five years. We are not, however, reasonably certain that we will exercise any of the options to extend and as such, they have not been included in the remaining lease terms.

Balance sheet information related to our operating leases was as follows (in thousands):


	Classification	March 31, 2020		December 31, 2019
ROU assets	Operating lease ROU assets	$	19,156	$	17,901

Lease liabilities
Current	Accrued liabilities	$	3,211	$	3,037
Noncurrent	Operating lease liabilities		17,184		16,094
Total lease liabilities		$	20,395	$	19,131

The components of lease cost were as follows (in thousands):


	Three Months Ended
	March 31,
	2020		2019
Operating lease cost	$	1,031	$	974
Short-term lease cost		129		173
Variable lease cost		349		382
Total lease cost	$	1,509	$	1,529

Cash flow and non-cash information related to our operating leases were as follows (in thousands):

Other supplemental information related to our operating leases was as follows:


	March 31, 2020		December 31, 2019
Weighted average remaining lease term (in years)	8.3		8.2
Weighted average discount rate	5.1	%	5.3	%

Remaining maturities of lease liabilities governed under ASC 842 Leases as of March 31, 2020 were as follows (in thousands):


2020	$	2,808
2021		3,955
2022		2,855
2023		2,550
2024		2,159
2025		1,930
Thereafter		8,942
Total lease payments		25,199
Less: Interest		(4,804)
Total lease liabilities under ASC 842 Leases	$	20,395

Three Months Ended

March 31,

Operating cash flows - cash paid for amounts included in the measurement of operating lease liabilities

Operating lease ROU assets obtained in exchange for new lease liabilities