NOTE 13 – 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 June 30, 2025.

For the three and six months ended June 30, 2025, the components of the Company’s lease expense were as follows (in thousands):


	Three months ended June 30, 2025		Three months ended June 30, 2024
Operating lease cost	$	1,737	$	1,588
Short-term lease cost		31		35
Variable lease cost		110		74
Total Lease Cost	$	1,879	$	1,697


	Six months ended June 30, 2025		Six months ended June 30, 2024
Operating lease cost	$	3,476	$	3,041
Short-term lease cost		63		70
Variable lease cost		219		162
Total Lease Cost	$	3,758	$	3,273

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


	Six months ended June 30, 2025			Six months ended June 30, 2024
Weighted-average remaining lease term (in years)		6.89			7.19
Weighted average discount rate		7.95	%		7.35	%

Future undiscounted cash flows for each of the next five years and thereafter and reconciliation to the lease liabilities recognized on the unaudited condensed consolidated balance sheet as of June 30, 2025 were as follows (in thousands):



2025	$	2,916
2026		5,499
2027		4,417
2028		3,695
2029		3,077
Thereafter		10,773
Total lease payments	$	30,378
Less: imputed interest		(7,165	)
Present value of lease liabilities	$	23,213

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 three and six months ended June 30, 2025, tool rental revenue was approximately $32.8 million and $67.3 million, respectively. For the three and six months ended June 30, 2024, tool rental revenue was approximately $28.3 million and $58.3 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.