Other Long-Term Obligations and Commitments

9 Months Ended

Sep. 30, 2022

Other Long-Term Obligations and Commitments

(5) 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. A new finance lease for office equipment is included in property and equipment, other current liabilities and other long-term liabilities this quarter. 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 nine months ended September 30, 2022 were $

468

thousand. Cash payments included in the operating lease costs for the nine months ended September 30, 2022 were $

499

thousand. The remaining operating lease terms range between

months.

The Company amended certain leases for office space in Texas providing for remaining payments of $174,000 in 2022, $251,000 in 2023, $107,000 in 2024 and $27,000 in 2025.

Office

space rent expense for the nine months ended September 30, 2022 and 2021 was $563,000 and $441,000, respectively.

The payment schedule for the Company’s operating lease obligations as of September 30, 2022 is as

follows:


(Thousands of dollars)	Operating Leases
2022		174
2023		251
2024		107
2025		27

Total undiscounted lease payments	$	559
Less: Amount associated with discounting		(54	)

Net operating lease liabilities	$	505

Asset Retirement Obligation:

A reconciliation of the liability for plugging and abandonment costs for the nine months ended September 30, 2022 is as follows:


(Thousands of dollars)	September 30, 2022
Asset retirement obligation at December 31, 2021	$	14,295
Liabilities incurred		11
Liabilities settled		(1,276	)
Accretion expense		503

Asset retirement obligation at September 30, 2022	$	13,533