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LEASES | 6 Months Ended
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Jun. 30, 2019
LEASES |
LEASES | NOTE 5—LEASES As of June 30, 2019, the Company was the lessee for approximately 580 operating leases with durations greater than a year, approximately 14 subleases, approximately 65 finance leases, and is the lessor for three owned properties. Most of the operating leases either have renewal options of between one and five years or convert to month-to-month agreements at the end of the specified lease term. In addition to normal lease activity, the four Affirm and Canadian divestitures occurring in the Current Period included the assignment of leases to the buyers. The assigned leases impacted expenses during the Current Period, but were not included in the June 30, 2019 consolidated balance sheet. The Company’s operating leases are primarily for (i) housing personnel for operations, (ii) operational yards for storing and staging equipment, (iii) equipment used in operations, (iv) facilities used for back-office functions and (v) equipment used for back office functions. The Company has determined that it is reasonably certain to exercise future renewal options for one facility lease for the corporate office building in Gainesville, Texas. The majority of the Company’s long-term lease expenses are at fixed prices. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets and the Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company has a significant number of short-term leases including month-to-month agreements that continue in perpetuity until the lessor or the Company terminates the lease agreement. Due to the volatility of the price of a barrel of oil and the short-term nature of the Company’s contracts with customers, the Company has determined that no short-term leases with indefinite renewals are reasonably certain to last more than a year into the future. When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, most of the Company’s leases do not provide a readily determinable implicit rate. Therefore, the Company estimates the incremental borrowing rate based on what it would pay to borrow on a collateralized basis, over a similar term based on information available at lease commencement. The Company previously had an $18.8 million lease obligation associated with certain exit and disposal activities in connection with approximately 17 abandoned facility leases as of December 31, 2018. Upon adopting the new lease standard, the former exit-disposal cease use liability was reclassified and factored into the initial right-of-use (“ROU”) asset impairment calculation. The financial impact of leases is listed in the tables below: ​
​ | ​ | ​ | ​ | ​
Balance Sheet | Classification | ​ | As of June 30, 2019
​ | ​ | ​ | (in thousands)
Assets | ​ | ​ | ​ | ​
ROU Assets(1) | Long-term right-of-use assets | ​ | $ | 75,302
Finance lease assets(2) | Property and equipment | ​ | ​ | 422
Liabilities | ​ | ​ | ​ | ​
Operating lease liabilities ― ST | Current operating lease liabilities | ​ | $ | 19,553
Operating lease liabilities ― LT(3) | Long-term operating lease liabilities | ​ | ​ | 75,169
Finance lease liabilities ― ST | Current portion of finance lease obligations | ​ | ​ | 421
Finance lease liabilities ― LT | Other long term liabilities | ​ | ​ | 129
| (1) | Net of impairment of $17.9 million.
| (2) | Net of accumulated amortization of $1.7 million.
| (3) | The $16.8 million on the consolidated balance sheet as of December 31, 2018 represented long-term lease liabilities in connection with the exit-disposal rules prior to adopting the new lease standard.
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Statements of Operations and Cash Flows | Classification | ​ | Three months ended June 30, 2019 | ​ | Six months ended June 30, 2019
​ | ​ | ​ | (in thousands)
Operating lease cost: | ​ | ​ | ​ | ​ | ​ | ​ | ​
Operating lease cost ― fixed | Cost of revenue and Selling, general and administrative | ​ | $ | 7,091 | ​ | $ | 15,150
Lease abandonment costs | Lease abandonment costs | ​ | ​ | 183 | ​ | ​ | 1,256
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Short-term agreements: | Cost of revenue | ​ | $ | 24,914 | ​ | $ | 47,812
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Finance lease cost: | ​ | ​ | ​ | ​ | ​ | ​ | ​
Amortization of leased assets | Depreciation and amortization | ​ | $ | 523 | ​ | $ | 737
Interest on lease liabilities | Interest expense, net | ​ | ​ | 3 | ​ | ​ | 7
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Lessor income: | ​ | ​ | ​ | ​ | ​ | ​ | ​
Sublease income | Cost of sales and lease abandonment costs | ​ | $ | 390 | ​ | $ | 762
Lessor income | Cost of sales | ​ | ​ | 69 | ​ | ​ | 180
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Statement of cash flows | ​ | ​ | ​ | ​ | ​ | ​ | ​
Cash paid for operating leases | Operating cash flows | ​ | $ | 7,606 | ​ | $ | 15,957
Cash paid for finance leases lease interest | Operating cash flows | ​ | ​ | 3 | ​ | ​ | 7
Cash paid for finance leases | Financing cash flows | ​ | ​ | 264 | ​ | ​ | 549
​ ​
​ | ​ | ​ | ​
Long Term and Discount Rate | ​ | As of June 30, 2019
Weighted-average remaining lease term (years) | ​ | ​ | ​
Operating leases | ​ | 4.8 | ​
Finance leases | ​ | 1.3 | ​
Weighted-average discount rate | ​ | ​ | ​
Operating leases | ​ | 5.3 | %
Finance leases | ​ | 5.2 | %
​ ​ The Company has the following operating and finance lease commitments as of June 30, 2019: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Period |  | Operating Leases(1) |  | Finance Leases |  | Total
​ | ​ | (in thousands)
July 2019 through December 2019 | ​ | $ | 14,874 | ​ | $ | 371 | ​ | $ | 15,245
2020 | ​ |  | 21,852 | ​ |  | 135 | ​ |  | 21,987
2021 | ​ |  | 15,113 | ​ |  | 89 | ​ |  | 15,202
2022 | ​ |  | 11,745 | ​ |  | — | ​ |  | 11,745
2023 | ​ |  | 9,985 | ​ |  | — | ​ |  | 9,985
Thereafter | ​ |  | 47,911 | ​ |  | — | ​ |  | 47,911
Total minimum lease payments | ​ | $ | 121,480 | ​ | $ | 595 | ​ | $ | 122,075
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Less reconciling items to reconcile undiscounted cash flows to lease liabilities: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Leases commencing in the future | ​ | ​ | (621) | ​ | ​ | — | ​ | ​ | (621)
Short-term leases excluded from balance sheet | ​ | ​ | (2,785) | ​ | ​ | — | ​ | ​ | (2,785)
Imputed interest | ​ | ​ | (23,352) | ​ | ​ | (45) | ​ | ​ | (23,397)
Total reconciling items | ​ | ​ | (26,758) | ​ | ​ | (45) | ​ | ​ | (26,803)
Total liabilities per balance sheet | ​ | ​ | 94,722 | ​ | ​ | 550 | ​ | ​ | 95,272
| (1) | This table excludes sublease income of $0.7 million from July 2019 to December 2019, $0.9 million during 2020 and $0.2 million during 2021.

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