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Leases | 6 Months Ended
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Jun. 30, 2019
Lessee Disclosure [Abstract] |
Leases | ant Accounting Policy At inception, contracts are assessed for the presence of a lease according to criteria laid out by ASC 842. If a lease is present, further criteria is assessed to determine if the lease should be classified as an operating or finance lease. Operating leases are presented on the Consolidated Balance Sheet as Operating lease assets with the corresponding lease liabilities presented in Operating lease liabilities and Non-current operating lease liabilities. Finance lease assets are presented on the Consolidated Balance Sheet within Property, plant and equipment, net with the corresponding liabilities presented in Current maturities of long-term debt and Long-term debt. Generally, lease liabilities are recognized at commencement and based on the present value of the future minimum lease payments to be made over the lease term. Lease assets are then recognized based on the value of the lease liabilities. Where implicit lease rates are not determinable, the minimum lease payments are discounted using the Company’s collateralized incremental borrowing rates. Operating leases are expensed according to their nature and recognized in Lease operating expenses, Selling and general expenses or capitalized in the Consolidated Financial Statements. Finance leases are depreciated with expenses recognized in Depreciation, depletion, and amortization and Interest expense, net on the Consolidated Statement of Operations. Nature of Leases The Company has entered into various operating leases such as a gas processing plant, floating production storage and off-take vessels, buildings, marine vessels, vehicles, drilling rigs, pipelines, and other oil and gas field equipment. Remaining lease terms range from 1 year to 17 years, some of which may include options to extend leases for multi-year periods and others which include options to terminate the leases within 1 month. Options to extend lease terms are at the Company’s discretion. Early lease terminations are a combination of both at Company discretion and mutual agreement between the Company and lessor. Purchase options also exist for certain leases. Related Expenses Expenses related to finance and operating leases included in the Consolidated Financial Statements are as follows:
(Thousands of dollars) |  | Financial Statement Category |  | Three Months Ended June 30, 2019 |  | Six Months Ended June 30, 2019
Operating lease 1,2 |  | Lease operating expenses |  | $ | 57,381 |  |  | 115,904 |
Operating lease 2 |  | Selling and general expense |  | 3,235 |  |  | 6,344 |
Operating lease 2 |  | Other operating expense |  | 894 |  |  | 894 |
Operating lease 2 |  | Property, plant and equipment |  | 32,115 |  |  | 55,562 |
Operating lease 2 |  | Asset retirement obligations |  | — |  |  | 3,024 |
Finance lease |  |  |  |  |  |
Amortization of asset |  | Depreciation, depletion and amortization |  | 210 |  |  | 420 |
Interest on lease liabilities |  | Interest expense, net |  | 101 |  |  | 202 |
Sublease income |  | Other income |  | (422 | ) |  | (639 | )
Net lease expense |  |  |  | $ | 93,514 |  |  | 181,711 |
1 For the three months and six months ended June 30, 2019, includes variable lease expenses of $6.6 million and $13.8 million, respectively, primarily related to additional volumes processed at a gas processing plant. 2 For the three months ended includes $10.4 million for Lease operating expense, $1.2 million for Selling and general expense, $28.7 million for Property, plant and equipment, net relating to short-term leases due within 12 months. For the six months ended includes $22.4 million for Lease operating expense, $2.3 million for Selling and general expense, $48.8 million for Property, plant and equipment, net and $3.0 million for Asset retirement obligations relating to short-term leases due within 12 months. Expenses primarily relate to drilling rigs and other oil and gas field equipment. Maturity of Lease Liabilities໿
(Thousands of dollars) | Operating Leases 1 |  | Finance Leases |  | Total
2019 | $ | 112,185 |  |  | 534 |  |  | 112,719 |
2020 | 107,652 |  |  | 1,069 |  |  | 108,721 |
2021 | 59,788 |  |  | 1,069 |  |  | 60,857 |
2022 | 54,548 |  |  | 1,069 |  |  | 55,617 |
2023 | 54,041 |  |  | 1,069 |  |  | 55,110 |
Remaining | 474,598 |  |  | 5,610 |  |  | 480,208 |
Total future minimum lease payments | 862,812 |  |  | 10,420 |  |  | 873,232 |
Less imputed interest | (266,009 | ) |  | (2,083 | ) |  | (268,092 | )
Present value of lease liabilities 2 | $ | 596,803 |  |  | 8,337 |  |  | 605,140 |
1 Excludes $271.8 million of minimum lease payments for leases entered but not yet commenced. These payments relate to an expansion of an existing gas processing plant and payments are anticipated to commence at the end of 2019 for 20 years. 2 Includes both the current and long-term portion of the lease liabilities. Lease Term and Discount Rate
﻿ | June 30, 2019
Weighted average remaining lease term: |
Operating leases | 12 years |
Finance leases | 10 years |
Weighted average discount rate: |
Operating leases | 5.0 | %
Finance leases | 4.7 | %
Other Information໿
(Thousands of dollars) | Six Months Ended June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities: |
Operating cash flows from operating leases | $ | 90,598 |
Operating cash flows from finance leases | 204 |
Financing cash flows from finance leases | 335 |
Right-of-use assets obtained in exchange for lease liabilities: |
Operating leases | $ | 6,033 |

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