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Leases
 9 Months Ended
Sep. 30, 2024
Leases  
Leases

Note 9 - Leases

 

As a lessee, Empire leases its corporate office headquarters in Tulsa, Oklahoma, and one field office in North Dakota. The leases expire between 2024 and 2027. The corporate office has an option to renew for an additional five-year term. The option to renew the lease is generally not considered reasonably certain to be exercised. Therefore, the period covered by such optional period is not included in the determination of the term of the lease and the lease payments during these periods are similarly excluded from the calculation of right-of-use lease asset and lease liability balances.

 

Empire also leases vehicles primarily used in our field operations. These vehicle leases typically have a three-year life.

 

Empire recognizes right-of-use lease expense on a straight-line basis, except for certain variable expenses that are recognized when the variability is resolved, typically during the period in which they are paid. Variable right-of-use lease payments typically include charges for property taxes, insurance, and variable payments related to non-lease components, including common area maintenance.

 

Right-of-use lease expense was approximately $407,000 and $288,000 for the periods ended September 30, 2024 and 2023, respectively. Cash paid for right-of-use leases was approximately $376,000 and $279,000 for the same periods.

 

  

Supplemental balance sheet information related to the right-of-use leases is as follows:

   September 30, 2024   December 31, 2023 
           
Net operating lease asset (included in Other Property and Equipment)  $716,956   $1,077,031 
           
Current portion of lease liability  $415,850   $432,822 
Long-term lease liability   238,674    544,382 
Total right-of-use lease liabilities  $654,524   $977,204 

 

 

The weighted-average remaining term for Empire’s right-of-use leases is 1.6 years. The weighted-average discount rate was 8.35% for the third quarter of 2024.

 

Maturities of lease liabilities are as follows as of September 30, 2024:

       
Year 1    $454,117 
Year 2     226,702 
Year 3     21,700 
Year 4     — 
Year 5     — 
Total lease payments     702,519 
Less imputed interest     (47,995)
Total lease obligation    $654,524