Leases

6 Months Ended

Jun. 30, 2020

The Company determines if an arrangement is a lease at inception by assessing whether it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company’s leases are primarily related to property leases for its field offices. The Company's leases have remaining lease terms of two months to 9 years. Renewal and termination options are included in the lease term when it is reasonably certain that the Company will exercise the option. The Company's lease agreements do not contain any contingent rental payments, material residual guarantees or material restrictive covenants.

ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As substantially all of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate to determine the present value of lease payments. Based on the present value of lease payments for the Company's existing leases, the Company recorded net lease assets and lease liabilities of approximately $451,000, respectively, upon adoption. The Company had no finance leases. The new lease standard did not materially impact the Company's condensed consolidated statements of operations and had no impact on the Company's condensed consolidated statements of cash flows.

The impact of the new lease standard on the June 30, 2020 condensed consolidated balance sheet was as follows:


	Classification on the Condensed Consolidated Balance Sheet	June 30, 2020
		(in thousands, except years)
Operating lease assets	Right of use assets-operating leases	$	510

Current lease liabilities	Current operating leases	$	183
Noncurrent lease liabilities	Long-term operating leases	327
Total lease liabilities		$	510

Weighted average remaining lease term in years		2.1
Implicit Rate		3.1		%

Operating lease costs are recognized on a straight-line basis over the lease term. Total operating lease costs for the six months ended June 30, 2020 was approximately $275,000.


	June 30, 2020
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities
Operating lease cost ^{(1) (2)}	$	275

(1) Lease costs are classified on the condensed consolidated statements of operations in cost of sales, cost of compressors and selling, general and administrative expenses.

(2) Includes costs of $179,000 for leases with terms of 12 months or less and $96,000 for leases with terms greater than 12 months.

The following table shows the future maturities of lease liabilities as of June 30, 2020:


Years Ending December 31,	Lease Liabilities
	(in thousands)
2020 (excluding the six months ended June 30, 2020)	$	101
2021	174
2022	47
2023	38
2024	38
Thereafter	168
Total lease payments	566
Less: Imputed interest	(56)
Total	$	510