Leases (Tables)

9 Months Ended

Sep. 30, 2025

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


	Three Months Ended September 30,						Nine Months Ended September 30,
	2025			2024			2025			2024
Finance lease costs - interest on lease liabilities	$	2,767		$	3,205		$	8,542		$	9,849
Operating lease costs, excluding short-term leases(1)		1,080			1,113			3,236			3,123
Short-term lease costs(2)		69,836			2,674			139,944			20,113
Variable lease costs(3)		667			616			2,001			1,848
Variable and fixed sublease income		(397	)		(359	)		(1,190	)		(1,077	)
Total lease costs	$	73,953		$	7,249		$	152,533		$	33,856

(1)

Operating lease costs 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 and well intervention vessels, most of which are short-term contracts not recognized as a ROU asset and lease liability on the Condensed Consolidated Balance Sheets. The short-term operating lease costs incurred during the periods presented are not necessarily indicative of the Company’s future short-term lease costs and obligations, as it routinely executes short-term contracts for the use of drilling rigs to support its drilling activities. Short-term lease costs for drilling rigs can vary significantly based on the timing of the drilling program. Market conditions can also contribute to the volatility and variability of short-term drilling rig lease costs.

(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 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 ROU asset and lease liability, adjusted for initial direct costs and incentives were as follows (in thousands):


	September 30, 2025		December 31, 2024
Operating leases:
Operating lease assets	$	9,749	$	11,294

Current portion of operating lease liabilities	$	3,674	$	3,837
Operating lease liabilities		12,881		15,489
Total operating lease liabilities	$	16,555	$	19,326

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

Other current liabilities	$	20,981	$	19,589
Other long-term liabilities		95,705		111,641
Total finance lease liabilities	$	116,686	$	131,230

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,
	2025		2024
Operating cash outflow from finance leases	$	8,542	$	9,849
Operating cash outflow from operating leases	$	4,463	$	4,149

ROU assets obtained in exchange for new operating lease liabilities(1)	$	—	$	1,909

(1)

See QuarterNorth Acquisition in Note 2 — Acquisitions and Divestitures.