Other Long-Term Obligations and Commitments

6 Months Ended

Jun. 30, 2021

Other Long-Term Obligations and Commitments

(6) Other Long-Term Obligations and Commitments:

Operating Leases:

The Company leases office facilities under operating leases and recognizes lease expense on a straight-line basis over the lease term. Leases assets and liabilities are initially recorded at commencement date based on the present value of lease payments over the lease term. As most of the Company’s lease contracts do not provide an implicit discount rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The weighted average discount rate used was 5.5%. Certain leases may contain variable costs above the minimum required payments and are not included in the

right-of-use

assets or liabilities. Leases may include renewal, purchase or termination options that can extend or shorten the term of the lease. The exercise of those options is at the Company’s sole discretion and is evaluated at inception and throughout the contract to determine if a modification of the lease term is required. Leases with an initial term of 12 months or less are not recorded on the balance sheet.

Operating lease costs for the six months ended June 30, 2021 were $287 thousand. Cash payments included in the operating lease cost for six months ended June 31, 2021 were $300 thousand. The weighted-average remaining operating lease terms is 14.5 months. The amortization and interest expense for the financing lease amounted to $2,302 and the cash payment for the lease was $2,552 and the lease term expired in April 2021.

The Company amended certain leases for office space in Texas providing for payments of $299,000 in 2021, $158,000 in 2022 and $17,000 in 2023.

Rent expense for office space for the six months ended June 30, 2021 and 2020 was $328,000 and $331,000, respectively.

The payment schedule for the Company’s operating lease obligations as of June 30, 2021 is as follows:


(Thousands of dollars)	Operating Leases
2021	$	299
2022		158
2023		17

Total undiscounted lease payments	$	474
Less: Amount associated with discounting		(21	)

Net operating lease liabilities	$	453

Asset Retirement Obligation:

A reconciliation of the liability for plugging and abandonment costs for the six months ended June 30, 2021 is as follows:


(Thousands of dollars)	June 30, 2021
Asset retirement obligation at December 31, 2020	$	13,660
Liabilities incurred		721
Liabilities settled		(281	)
Accretion expense		306

Asset retirement obligation at June 30, 2021	$	14,406