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LEASES

12 Months Ended

Dec. 31, 2024

NOTE 6—LEASES

As of December 31, 2024, the Company was the lessee for 364 operating leases with durations greater than a year, 17 subleases, 74 finance leases, and is the lessor for five 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.

The Company’s operating leases are primarily for (i) housing personnel for operations, (ii) operational yards for storing and staging equipment, (iii) vehicles and equipment used in operations, (iv) facilities used for back-office functions and (v) equipment used for back-office functions. 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, some of which continue in perpetuity until the lessor or the Company terminates the lease agreement. The majority of the Company’s lease expenses are in connection with short-term agreements, including expenses incurred hourly, daily, monthly and for other durations of time of one year or less. Due to the volatility of the price of a barrel of oil and the short-term nature of the vast majority of customer agreements, the Company must have flexibility to continuously scale operations at multiple locations. Consequently, the Company avoids committing to long-term agreements with numerous equipment rentals, vehicle fleet agreements and man-camp agreements, unless a business case supports a longer term agreement. Consequently, the Company’s future lease commitments as of December 31, 2024 do not reflect all of the Company’s short-term lease commitments.

Certain short-term and month-to-month vehicle and equipment leases have residual value guarantees if the Company decides to turn in vehicles and equipment before the end of the lease term. Vehicles and equipment turned in early result in sale proceeds, which have historically been equal to or greater than the residual value guarantees. There are no residual value guarantees if the vehicles or equipment is fully paid off.

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’s lease arrangements may contain both lease and non-lease components. The Company has elected to combine and account for lease and non-lease components as a single lease component for its leases.

The Company’s variable lease costs are comprised of variable royalties, variable common area maintenance, and variable reimbursement of lessor insurance and property taxes. Variable lease costs were $2.1 million, $1.7 million and $1.3 million during the years ended December 31, 2024, 2023 and 2022, respectively. Property tax expense of $1.3 million, $1.1 million and $0.8 million for the years ended December 31, 2024, 2023 and 2022, respectively, is included in variable lease costs, but excluded from the lease expense referenced in the table below.

The lease disclosures in this “Note 6—Leases” exclude revenue governed by the lease standard associated with the Company’s accommodations and rentals business, as all customer agreements are short-term. See “Note 5—Revenue” for a comprehensive discussion on revenue recognition.

The financial impact of leases is listed in the tables below:


		As of December 31,
Balance Sheet	Classification	2024		2023

		(in thousands)
Assets
Right-of-use assets⁽¹⁾	Long-term right-of-use assets	$	36,851	$	39,504
Finance lease assets	Property and equipment, net		528		724
Liabilities
Operating lease liabilities ― ST	Current operating lease liabilities	$	16,439	$	15,005
Operating lease liabilities ― LT	Long-term operating lease liabilities		31,092		37,799
Finance lease liabilities ― ST	Current portion of finance lease obligations		211		194
Finance lease liabilities ― LT	Other long-term liabilities		351		547

(1)	Right-of-use asset impairment of $0.6 million, zero and $0.1 million for the years ended December 31, 2024, 2023 and 2022, respectively, is recorded within lease abandonment costs in the accompanying consolidated statements of operations.


Statements of Operations and		Year ended December 31,
Cash Flows	Classification	2024		2023		2022

		(in thousands)
Operating lease cost:
Operating lease cost ― fixed	Cost of revenue and selling, general and administrative	$	14,138	$	14,271	$	13,975
Lease abandonment costs	Lease abandonment costs		358		42		449

Short-term agreements:	Cost of revenue	$	109,259	$	114,143	$	96,182

Finance lease cost:
Amortization of leased assets	Depreciation and amortization	$	217	$	126	$	110
Interest on lease liabilities	Interest expense, net		28		27		2

Lessor income:
Sublease income	Cost of revenue, selling, general and administrative and lease abandonment costs	$	1,853	$	1,648	$	1,514
Lessor income	Cost of revenue		151		251		317

Statement of cash flows
Cash paid for operating leases	Operating cash flows	$	19,485	$	19,904	$	21,437
Cash paid for finance leases lease interest	Operating cash flows		28		27		2
Cash paid for finance leases	Financing cash flows		231		98		112


	As of December 31,

Lease Term and Discount Rate	2024		2023
Weighted-average remaining lease term (years)
Operating leases	3.8		4.4
Finance leases	2.6		3.5
Weighted-average discount rate
Operating leases	5.4	%	4.9	%
Finance leases	7.0	%	7.0	%

The Company has the following operating and finance lease commitments as of December 31, 2024:


Period	Operating Leases⁽¹⁾		Finance Leases		Total

	(in thousands)
2025	$	22,143	$	242	$	22,385
2026		13,180		242		13,422
2027		8,183		125		8,308
2028		4,942		3		4,945
2029		3,000		—		3,000
Thereafter		3,602		—		3,602
Total minimum lease payments	$	55,050	$	612	$	55,662

Less reconciling items to reconcile undiscounted cash flows to lease liabilities:
Short-term leases excluded from balance sheet		3,675		—		3,675
Imputed interest		3,844		50		3,894
Total reconciling items		7,519		50		7,569
Total liabilities per balance sheet	$	47,531	$	562	$	48,093

(1)	The table above excludes sublease and lessor income of $2.0 million during 2025, $1.5 million during 2026, $0.3 million during 2027 and $0.1 million thereafter.