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Leases | 6 Months Ended
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Jun. 30, 2023
Leases [Abstract] |
Leases | (6) Leases Lease Overview We lease certain pipelines, storage tanks, railcars, office space, land, and equipment across our refining, fertilizer, and corporate operations. Most of our leases include one or more renewal options to extend the lease term, which can be exercised at our sole discretion. Certain leases also include options to purchase the leased property. Certain of our lease agreements include rental payments which are adjusted periodically for factors such as inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Additionally, we do not have any material lessor or sub-leasing arrangements. Balance Sheet Summary as of June 30, 2023 and December 31, 2022 The following tables summarize the right-of-use (“ROU”) asset and lease liability balances for the Company’s operating and finance leases at June 30, 2023 and December 31, 2022:
| June 30, 2023 |  | December 31, 2022
(in millions) | Operating Leases |  | Finance Leases |  | Operating Leases |  | Finance Leases
ROU assets, net |  |  |  |  |  |  |
Pipeline and storage | $ | 14 |  |  | $ | 19 |  |  | $ | 16 |  |  | $ | 20 |
Railcars | 10 |  |  | — |  |  | 11 |  |  | — |
Real estate and other | 16 |  |  | 15 |  |  | 13 |  |  | 15 |
Lease liability |  |  |  |  |  |  |
Pipelines and storage | 14 |  |  | 30 |  |  | 16 |  |  | 32 |
Railcars | 9 |  |  | — |  |  | 11 |  |  | — |
Real estate and other | 15 |  |  | 17 |  |  | 13 |  |  | 16 |
Lease Expense Summary for the Three and Six Months Ended June 30, 2023 and 2022 We recognize operating lease expense on a straight-line basis over the lease term within Direct operating expenses (exclusive of depreciation and amortization) and Cost of materials and other and finance lease expense on a straight-line basis over the lease term within Depreciation and amortization. For the three and six months ended June 30, 2023 and 2022, we recognized lease expense comprised of the following components:
| Three Months Ended June 30, |  | Six Months Ended June 30,
(in millions) | 2023 |  | 2022 |  | 2023 |  | 2022
Operating lease expense | $ | 5 |  |  | $ | 4 |  |  | $ | 9 |  |  | $ | 8 |
Finance lease expense: |  |  |  |  |  |  |
Amortization of ROU asset | 2 |  |  | 1 |  |  | 3 |  |  | 3 |
Interest expense on lease liability | 1 |  |  | 1 |  |  | 2 |  |  | 2 |
Short-term lease expense | 2 |  |  | 2 |  |  | 5 |  |  | 5 |
Lease Terms and Discount Rates The following outlines the remaining lease terms and discount rates used in the measurement of the Company’s ROU assets and lease liabilities:
| June 30, 2023 |  | December 31, 2022
| Operating Leases |  | Finance Leases |  | Operating Leases |  | Finance Leases
Weighted-average remaining lease term | 3.9 years |  | 5.8 years |  | 4.1 years |  | 6.3 years
Weighted-average discount rate | 5.5 | % |  | 9.0 | % |  | 5.2 | % |  | 9.0 | %
Maturities of Lease Liabilities The following summarizes the remaining minimum lease payments through maturity of the Company’s lease liabilities at June 30, 2023:
(in millions) | Operating Leases |  | Finance Leases
Remainder of 2023 | $ | 10 |  |  | $ | 6 |
2024 | 14 |  |  | 11 |
2025 | 8 |  |  | 11 |
2026 | 6 |  |  | 11 |
2027 | 3 |  |  | 10 |
Thereafter | 3 |  |  | 13 |
Total lease payments | 44 |  |  | 62 |
Less: imputed interest | (6) |  |  | (15) |
Total lease liability | $ | 38 |  |  | $ | 47 |
The Company has entered into lease commitments that have not yet commenced, as follows: •On February 21, 2022, CRNF entered into the First Amendment to the On-Site Product Supply Agreement with Messer LLC (“Messer”), which amended the July 31, 2020 On-Site Product Supply Agreement (as amended, the “Messer Agreement”). Under the Messer Agreement, among other obligations, Messer is obligated to supply oxygen and make certain capital improvements during the term of the Messer Agreement, and CRNF is obligated to take as available and pay for oxygen from Messer’s facility. This arrangement for CRNF’s purchase of oxygen from Messer does not meet the definition of a lease under FASB ASC Topic 842, Leases (“Topic 842”), as CRNF does not expect to receive substantially all of the output, which includes oxygen, nitrogen, and compressed air, of Messer’s on-site production from its air separation unit over the life of the Messer Agreement. The Messer Agreement also obligates Messer to install a new oxygen storage vessel, related equipment and infrastructure (“Oxygen Storage Vessel” or “Vessel”) to be used solely by the Coffeyville Fertilizer Facility. The arrangement for the use of the Oxygen Storage Vessel meets the definition of a lease under Topic 842, as CRNF will receive all output associated with the Vessel. Based on terms outlined in the Messer Agreement, the Company expects the lease of the Oxygen Storage Vessel to be classified as a financing lease with an estimated amount within the range of $20 million to $25 million being capitalized upon lease commencement when the Vessel is placed in service, which is currently expected to occur within the next 12 months. •On July 14, 2022, the Company entered into the Sixth Amendment to the Sugar Land Plaza Office Building Agreement with LCFRE Sugar Land Town Square, LLC (“LCFRE”), which amends the Sugar Land Plaza Office Building Agreement dated 2016 (as amended, the “LCFRE Agreement”). Under the LCFRE Agreement, LCFRE will provide office space to the Company which will continue to serve as the Company’s corporate office in Sugar Land, Texas with the lease term starting on October 1, 2023. Based on the terms outlined in the LCFRE Agreement, the Company expects the lease to be classified as an operating lease under Topic 842, with an estimated amount within the range of $8 million to $12 million being capitalized upon lease commencement.
Leases | (6) Leases Lease Overview We lease certain pipelines, storage tanks, railcars, office space, land, and equipment across our refining, fertilizer, and corporate operations. Most of our leases include one or more renewal options to extend the lease term, which can be exercised at our sole discretion. Certain leases also include options to purchase the leased property. Certain of our lease agreements include rental payments which are adjusted periodically for factors such as inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Additionally, we do not have any material lessor or sub-leasing arrangements. Balance Sheet Summary as of June 30, 2023 and December 31, 2022 The following tables summarize the right-of-use (“ROU”) asset and lease liability balances for the Company’s operating and finance leases at June 30, 2023 and December 31, 2022:
| June 30, 2023 |  | December 31, 2022
(in millions) | Operating Leases |  | Finance Leases |  | Operating Leases |  | Finance Leases
ROU assets, net |  |  |  |  |  |  |
Pipeline and storage | $ | 14 |  |  | $ | 19 |  |  | $ | 16 |  |  | $ | 20 |
Railcars | 10 |  |  | — |  |  | 11 |  |  | — |
Real estate and other | 16 |  |  | 15 |  |  | 13 |  |  | 15 |
Lease liability |  |  |  |  |  |  |
Pipelines and storage | 14 |  |  | 30 |  |  | 16 |  |  | 32 |
Railcars | 9 |  |  | — |  |  | 11 |  |  | — |
Real estate and other | 15 |  |  | 17 |  |  | 13 |  |  | 16 |
Lease Expense Summary for the Three and Six Months Ended June 30, 2023 and 2022 We recognize operating lease expense on a straight-line basis over the lease term within Direct operating expenses (exclusive of depreciation and amortization) and Cost of materials and other and finance lease expense on a straight-line basis over the lease term within Depreciation and amortization. For the three and six months ended June 30, 2023 and 2022, we recognized lease expense comprised of the following components:
| Three Months Ended June 30, |  | Six Months Ended June 30,
(in millions) | 2023 |  | 2022 |  | 2023 |  | 2022
Operating lease expense | $ | 5 |  |  | $ | 4 |  |  | $ | 9 |  |  | $ | 8 |
Finance lease expense: |  |  |  |  |  |  |
Amortization of ROU asset | 2 |  |  | 1 |  |  | 3 |  |  | 3 |
Interest expense on lease liability | 1 |  |  | 1 |  |  | 2 |  |  | 2 |
Short-term lease expense | 2 |  |  | 2 |  |  | 5 |  |  | 5 |
Lease Terms and Discount Rates The following outlines the remaining lease terms and discount rates used in the measurement of the Company’s ROU assets and lease liabilities:
| June 30, 2023 |  | December 31, 2022
| Operating Leases |  | Finance Leases |  | Operating Leases |  | Finance Leases
Weighted-average remaining lease term | 3.9 years |  | 5.8 years |  | 4.1 years |  | 6.3 years
Weighted-average discount rate | 5.5 | % |  | 9.0 | % |  | 5.2 | % |  | 9.0 | %
Maturities of Lease Liabilities The following summarizes the remaining minimum lease payments through maturity of the Company’s lease liabilities at June 30, 2023:
(in millions) | Operating Leases |  | Finance Leases
Remainder of 2023 | $ | 10 |  |  | $ | 6 |
2024 | 14 |  |  | 11 |
2025 | 8 |  |  | 11 |
2026 | 6 |  |  | 11 |
2027 | 3 |  |  | 10 |
Thereafter | 3 |  |  | 13 |
Total lease payments | 44 |  |  | 62 |
Less: imputed interest | (6) |  |  | (15) |
Total lease liability | $ | 38 |  |  | $ | 47 |
The Company has entered into lease commitments that have not yet commenced, as follows: •On February 21, 2022, CRNF entered into the First Amendment to the On-Site Product Supply Agreement with Messer LLC (“Messer”), which amended the July 31, 2020 On-Site Product Supply Agreement (as amended, the “Messer Agreement”). Under the Messer Agreement, among other obligations, Messer is obligated to supply oxygen and make certain capital improvements during the term of the Messer Agreement, and CRNF is obligated to take as available and pay for oxygen from Messer’s facility. This arrangement for CRNF’s purchase of oxygen from Messer does not meet the definition of a lease under FASB ASC Topic 842, Leases (“Topic 842”), as CRNF does not expect to receive substantially all of the output, which includes oxygen, nitrogen, and compressed air, of Messer’s on-site production from its air separation unit over the life of the Messer Agreement. The Messer Agreement also obligates Messer to install a new oxygen storage vessel, related equipment and infrastructure (“Oxygen Storage Vessel” or “Vessel”) to be used solely by the Coffeyville Fertilizer Facility. The arrangement for the use of the Oxygen Storage Vessel meets the definition of a lease under Topic 842, as CRNF will receive all output associated with the Vessel. Based on terms outlined in the Messer Agreement, the Company expects the lease of the Oxygen Storage Vessel to be classified as a financing lease with an estimated amount within the range of $20 million to $25 million being capitalized upon lease commencement when the Vessel is placed in service, which is currently expected to occur within the next 12 months. •On July 14, 2022, the Company entered into the Sixth Amendment to the Sugar Land Plaza Office Building Agreement with LCFRE Sugar Land Town Square, LLC (“LCFRE”), which amends the Sugar Land Plaza Office Building Agreement dated 2016 (as amended, the “LCFRE Agreement”). Under the LCFRE Agreement, LCFRE will provide office space to the Company which will continue to serve as the Company’s corporate office in Sugar Land, Texas with the lease term starting on October 1, 2023. Based on the terms outlined in the LCFRE Agreement, the Company expects the lease to be classified as an operating lease under Topic 842, with an estimated amount within the range of $8 million to $12 million being capitalized upon lease commencement.

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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 -Topic 842 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//842-20/tableOfContent + 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 -Topic 842 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//842-20/tableOfContent + Details
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