LEASES

12 Months Ended

Dec. 31, 2023

NOTE 8 – LEASES

The Company leases various facilities and vehicles under noncancelable operating lease agreements. The remaining lease terms for our leases range from 1 month to 14 years. These leases often include options to extend the term of the lease, which may be for periods of up to 5 years. When it is reasonably certain that the option will be exercised, the impact of the renewal term is included in the lease term for purposes of determining total future lease payments and measuring the ROU asset and lease liability. We apply the short-term lease policy election, which allows us to exclude from recognition leases with an original term of 12 months or less. We have not entered into any finance leases as of December 31, 2023.

For the year ended December 31, 2023 and 2022, the components of the Company’s lease expense were as follows (in thousands):


	Year Ended December 31, 2023			Year Ended December 31, 2022
Operating Lease Cost	$	6,077		$	5,722
Short-term Lease Cost		130			143
Variable Lease Cost		320			319
Sublease Income		(76	)		(183	)

Total Lease Cost	$	6,451		$	6,001

Supplemental balance sheet information related to leases was as follows (in thousands):


	Year Ended December 31, 2023			Year Ended December 31, 2022
Weighted-average remaining lease term (in years)		6.55			7.53
Weighted average discount rate		5.80	%		5.34	%


	Year Ended December 31, 2023		Year Ended December 31, 2022
Cash paid for amounts included in the measurement of lease liabilities		5,538		5,003

Future undiscounted cash flows for each of the next five years and thereafter and reconciliation to the lease liabilities recognized on the consolidated balance sheet as of December 31, 2023 were as follows (in thousands):


2024	$	4,923
2025		4,089
2026		3,522
2027		2,439
2028		1,939
Thereafter		5,605

Total lease payments	$	22,517
Less: imputed interest		(3,666	)

Present value of lease liabilities	$	18,851

The Company leases downhole drilling tools to companies in the oil and natural gas industry. Such leases are accounted for in accordance with ASC 842. For the year ended December 31, 2023 and 2022, tool rental revenue was approximately $119.2 million and $99.0 million, respectively. Our lease contract periods are short-term in nature and are typically daily, monthly, per well, or footage based. Due to the short-term nature of the contracts, no maturity table is presented.