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Leases (Tables)

9 Months Ended

Sep. 30, 2023

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


	Three Months Ended September 30,					Nine Months Ended September 30,
	2023			2022		2023			2022
Finance lease cost - interest on lease liabilities	$	3,604		$	1,386	$	10,969		$	5,179
Operating lease cost, excluding short-term leases(1)		1,323			568		3,419			1,703
Short-term lease cost(2)		33,152			12,982		103,001			24,838
Variable lease cost(3)		666			363		1,856			1,088
Variable and fixed sublease income		(207	)		—		(276	)		—
Total lease cost	$	38,538		$	15,299	$	118,969		$	32,808

(1)

Operating lease cost reflect a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a straight-line basis.

(2)

Short-term lease costs are reported at gross amounts and primarily represent costs incurred for drilling rigs, most of which are short-term contracts not recognized as a right-of-use asset and lease liability on the Condensed Consolidated Balance Sheets.

(3)

Variable lease costs primarily represent differences between minimum payment obligations and actual operating charges incurred by the Company related to its long-term leases.

Schedule of Right-of-Use ("ROU") Asset and Lease Liability, Adjusted for Initial Direct Costs and Incentives

The present value of the fixed lease payments recorded as the Company’s right-of-use (“ROU”) assets and lease liabilities, adjusted for initial direct costs and incentives were as follows (in thousands):


	September 30, 2023		December 31, 2022
Operating leases:
Operating lease assets	$	12,313	$	5,903

Current portion of operating lease liabilities	$	2,859	$	1,943
Operating lease liabilities		18,888		14,855
Total operating lease liabilities	$	21,747	$	16,798

Finance leases:
Proved properties	$	166,261	$	166,261

Other current liabilities	$	17,426	$	16,306
Other long-term liabilities		135,826		149,064
Total finance lease liabilities	$	153,252	$	165,370

Supplemental Cash Flow Information Related to Leases

The table below presents the supplemental cash flow information related to leases (in thousands):


	Nine Months Ended September 30,
	2023			2022
Operating cash outflow from finance leases	$	10,969		$	5,179
Operating cash outflow from operating leases	$	4,880		$	2,776

ROU assets obtained in exchange for new operating lease liabilities(1)	$	12,971		$	—
Remeasurement of lease liability arising from modification of ROU asset(2)	$	(5,124	)	$	—

(1)

See EnVen Acquisition in Note 2 — Acquisitions and Divestitures.

(2)

Lease termination accounted for as a lease modification based on the modified lease term. The termination did not take effect contemporaneously with the effective date of the modification.