On January 1, 2019, the Company adopted the new lease guidance under Topic 842, Leases, using the modified retrospective approach to each lease that existed at the date of initial application as well as leases entered into after that date. The Company has elected to report all leases at the beginning of the period of adoption and not restate its comparative periods. This standard does not apply to leases to explore for or use minerals, oil, natural gas and similar non-regenerative resources, including the intangible right to explore for those natural resources and rights to use the land in which those natural resources are contained.

The Company has entered into operating leases for operating locations, corporate offices and certain operating equipment. These leases have remaining lease terms of one month to nine years as of December 31, 2019. Currently, the Company does not have any finance leases. Renewal options are included in the right of use asset and lease liability if it is reasonably certain that the Company will exercise the option. The Company has elected the short-term lease recognition practical expedient whereby right of use assets and lease liabilities are not recognized for leasing arrangements with an initial term of one year or less.

Topic 842 requires that lessees and lessors discount lease payments at the lease commencement date using the rate implicit in the lease, if available, or the lessee’s incremental borrowing rate. The Company uses the implicit rate when readily determinable. If the implicit rate is not readily determinable, the Company uses its incremental borrowing rate based on the information available at the commencement date in the determination of the present value of future lease payments.

In the fourth quarter of 2019 the Company entered into a sale-leaseback transaction that qualified as a sale. The Company sold a facility for proceeds of $10.2 million and concurrently entered into an operating lease agreement with the unrelated third-party for certain floors of the building for a 58-month term. The associated gain on sale of approximately $800,000 is included in “Other operating expenses (income), net” in the consolidated statements of operations.

For the year ended December 31, 2019 the Company has entered into 3 new facility leases and recorded an increase to the operating lease right-of-use assets and corresponding operating lease liabilities of approximately $3.8 million. The Company also extended 9 facilities leases and recorded an increase to the operating lease right-of-use assets and corresponding operating lease liabilities of approximately $7.1 million.

The Company has elected to adopt the following practical expedients upon the transition date to Topic 842 on January 1, 2019:

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Use of portfolio approach: An entity can apply this guidance to a portfolio of leases with similar characteristics if the entity reasonably expects that the application of the leases model to the portfolio would not differ materially from the application of the leases model to the individual leases in that portfolio. This approach can also be applied to other aspects of the leases guidance for which lessees/lessors need to make judgments and estimates, such as determining the discount rate and determining and reassessing the lease term.

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Lease and non-lease components: As a practical expedient, lease and non-lease components may be combined where the revenue recognition pattern is the same and where the lease component, when accounted for separately, would be considered an operating lease. The Company’s contract drilling, pressure pumping and directional drilling contracts contain a lease component related to the underlying equipment utilized, in addition to the service component provided by the Company’s crews and expertise to operate the related equipment. The Company has concluded that the non-lease service of operating its equipment and providing expertise in the services provided to customers is predominant in the Company’s drilling, pressure pumping and directional drilling contracts. With the election of this practical expedient, the Company will continue to present a single performance obligation for these contracts under the revenue guidance in ASC 606.

Lease expense consisted of the following for the year ended December 31, 2019 (in thousands):

	Year Ended
	December 31, 2019
Operating lease cost	$	10,944
Short-term lease expense ⁽¹⁾		440
Total lease expense	$	11,384

Supplemental cash flow information related to leases for the year ended December 31, 2019 is as follows (in thousands):

	Year Ended
	December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	10,033

Right of use assets obtained in exchange for lease obligations:
Operating leases	$	10,870

Supplemental balance sheet information related to leases as of December 31, 2019 is as follows:

		December 31, 2019
Weighted Average Remaining Lease Term:
Operating leases	5.3 years

Weighted Average Discount Rate:
Operating leases			4.2	%

Maturities of operating lease liabilities as of December 31, 2019 are as follows (in thousands):

Year ending December 31,
2020	$	11,212
2021		8,484
2022		6,220
2023		3,955
2024		3,055
Thereafter		7,883
Total lease payments		40,809
Less imputed interest		(4,230	)
Total	$	36,579