Leases

12 Months Ended

Dec. 31, 2023

NOTE 11. LEASES

(a) As a lessee

Precision recognizes right-of-use assets primarily from its leases of real estate and vehicles and equipment.


	Real Estate			Vehicles and Equipment			Total
Balance, December 31, 2021	$	40,463		$	10,977		$	51,440
Additions		1,662			5,410			7,072
Acquired		6,990			—			6,990
Depreciation		(3,730	)		(3,535	)		(7,265	)
Lease remeasurements		(372	)		189			(183	)
Effect of foreign currency exchange differences		1,483			495			1,978
Balance, December 31, 2022	$	46,496		$	13,536		$	60,032
Additions		1,217			15,811			17,028
Acquired		574			892			1,466
Derecognition		(5,947	)		(685	)		(6,632	)
Depreciation		(3,559	)		(4,741	)		(8,300	)
Lease remeasurements		(789	)		1,314			525
Effect of foreign currency exchange differences		(480	)		(201	)		(681	)
Balance, December 31, 2023	$	37,512		$	25,926		$	63,438

Precision’s real estate lease contracts often contain renewal options which may impact the determination of the lease term for purposes of calculating the lease obligation. If it is reasonably certain that a renewal option will be exercised, the renewal period is included in the lease term. When entering a lease, Precision assesses whether it is reasonably certain renewal options will be exercised. Reasonable certainty is established if all relevant facts and circumstances indicate an economic incentive to exercise the renewal option. For the majority of its real estate leases, Precision is reasonably certain it will exercise its renewal option. Accordingly, the renewal period has been included in the lease term used to calculate the lease obligation.

For the period ended December 31, 2023, Precision had interest and payments of $13 million (2022 – $10 million) in relation to its lease obligations.

The Corporation has commitments under various lease agreements, primarily for real estate and vehicles and equipment. Terms of Precision’s real estate leases run for a period of one to 10 years while vehicle and equipment leases are typically for terms of between three and four years. Expected non-cancellable undiscounted operating lease payments are as follows:


	2023		2022
Less than one year	$	17,540	$	10,985
One to five years		42,460		28,977
More than five years		10,748		8,628
	$	70,748	$	48,590

(b) As a lessor

Precision leases its rig equipment under long-term drilling contracts with terms ranging from one to five years. At December 31, 2023, the net book value of the underlying rig equipment subject to long-term drilling contracts was $554 million (2022 – $774 million).

The following table sets out a maturity analysis of lease payments, showing the undiscounted lease payments to be received subsequent to December 31, 2023: .


	Operating Leases		Finance Leases
Less than one year	$	430,702	$	764
One to five years		540,906		3,176
More than five years		57,061		3,473
Total undiscounted lease receipts	$	1,028,669	$	7,413
Unearned finance income on lease receipts				(1,639	)
Net investment in the lease			$	5,774