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Leases | 12 Months Ended
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Dec. 31, 2019
Leases |
Leases | 8. Leases As a lessee, we lease real estate, apartments, forklifts, vehicles and trucks, and other equipment under non-cancellable agreements. We determine if these contracts are or contain a lease at inception and review the facts and circumstances of the arrangement to classify the leased asset as operating or finance. To assess whether a contract is or contains a lease, we consider whether (i) explicitly or implicitly identified assets have been deployed in the contract and (ii) whether we obtain substantially all the economic benefits from the use of that underlying asset and direct how and for what purpose the asset is used during the term of the contract. The portion of active leases within our portfolio classified as operating leases are included in operating lease right-of-use assets and current and long-term operating lease liabilities on our consolidated balance sheet. The finance lease right-of-use assets portion of the active lease agreements are included in property and equipment and current and long-term finance lease obligations on our consolidated balance sheets. The ROU assets represent our right to use the underlying asset for the lease term and lease liabilities represent our obligation to make minimum lease payments arising from the lease for the duration of the lease term. Certain of our leases include one or more options to renew, with renewal terms that can extend the lease term from one to 10 years or greater. The exercise of lease renewal options is typically at our discretion. The measurement of the lease term includes options to extend or renew the lease when it is reasonably certain that we will exercise that option. We do not have leases that include options to purchase leased property or that provide for the automatic transfer of ownership of leased property to us, residual value guarantees, or the incurrence by us of other restrictions or covenants. To determine the present value of future minimum lease payments, we use the implicit rate when readily determinable; however, many of our leases do not provide an implicit rate, therefore to determine the present value of minimum lease payments we use our incremental borrowing rate based on the information available at commencement date of the lease. Our finance lease agreements typically include an interest rate that is used to determine the present value of future lease payments. Minimum lease payments are expensed on a straight-line basis over the term of the lease, including reasonably certain renewal options. In addition, some leases may require additional contingent or variable lease payments based on factors specific to the individual agreement. Variable lease payments for which we are typically responsible include payment of real estate taxes and maintenance expenses. These payments are expensed as incurred and recorded as variable lease costs. The following are the components of operating and finance lease costs:
|  |  | Year Ended December 31, 2019
Finance lease cost: |  |  |
Amortization of right-of-use assets |  | $ | 7,601
Interest expense |  |  | 877
Operating lease cost |  |  | 8,329
Short-term lease cost |  |  | 847
Variable lease cost |  |  | 528
Sublease income |  |  | (455)
Total lease cost |  | $ | 17,727
The following is supplemental cash flow information for our operating and finance leases:
|  |  | Year Ended December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities: |  |  |
Operating cash flows from finance leases |  | $ | 877
Operating cash flows from operating leases |  |  | 6,828
Financing cash flows from finance leases |  |  | 7,484
Total |  | $ | 15,189
Right-of-use assets obtained in exchange for new lease obligations: |  |  |
Operating leases |  | $ | 8,054
Finance leases |  |  | 3,008
Total |  | $ | 11,062
The following is the aggregate future lease payments for operating and finance leases as of December 31, 2019:
|  |  | Operating |  |  | Finance
2020 |  | $ | 7,691 |  | $ | 7,434
2021 |  |  | 6,291 |  |  | 3,438
2022 |  |  | 3,967 |  |  | 768
2023 |  |  | 3,072 |  |  | 4
2024 |  |  | 2,453 |  |  | —
Thereafter |  |  | 7,163 |  |  | —
Total undiscounted lease payments |  |  | 30,637 |  |  | 11,644
Less: effects of discounting |  |  | (3,617) |  |  | (999)
Present value of lease payments |  | $ | 27,020 |  | $ | 10,645
The following represents the average lease terms and discount rates for our operating and finance lease portfolio as of December 31, 2019:
|  | December 31, 2019
Weighted average remaining lease term: |  |  |
Finance leases |  | 1.51 | years
Operating leases |  | 5.82 | years
Weighted average discount rate |  |  |
Finance leases |  | 12.18 | %
Operating leases |  | 3.76 | %
As a lessor, we rent a fleet of frac valves and ancillary equipment for short-term rental periods, typically one to two months. Our lessor portfolio consists mainly of operating leases for equipment utilized during the drilling, completion and production phases of our customers’ wells. At this time, most lessor agreements contain less than three-month terms with no renewal options that are reasonably certain to exercise, or early termination options based on established terms specific to the individual agreement. See Note 7 for disaggregation of revenue. Disclosures related to periods prior to adoption of new lease standard Operating and Capital Leases: We lease certain facilities, vehicles, equipment, office and manufacturing space under noncancelable operating leases which expire at various dates. We are also party to a significant number of month‑to‑month leases that can be canceled at any time. Total rent expense under operating leases was $7.7 million in 2018 and $7.1 million in 2017. Accumulated depreciation for capital leases totaled $8.6 million at December 31, 2018. Minimum lease payments, including executory costs and interest, under capital and operating leases with non-cancelable terms as of December 31, 2018 were as follows:
|  |  | Operating |  |  | Capital
2019 |  | $ | 6,638 |  | $ | 8,740
2020 |  |  | 4,618 |  |  | 6,790
2021 |  |  | 3,487 |  |  | 2,533
2022 |  |  | 2,195 |  |  | 41
2023 |  |  | 1,426 |  |  | —
Thereafter |  |  | 3,339 |  |  | —
|  | $ | 21,703 |  | $ | 18,104

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