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LEASES

9 Months Ended

Sep. 30, 2023

2. LEASES

The Company leases equipment and office space pursuant to operating leases. The Company determines if an arrangement is or contains a lease at inception and combines lease and non-lease components, when fixed, for all lease contracts. Non-lease components include common area maintenance charges on office leases and, when applicable, services associated with equipment leases. Operating leases with a lease term greater than 12 months where the Company is the lessee are included in “Operating lease right of use assets” and “Operating lease liabilities” on the unaudited condensed consolidated balance sheets and are recorded based on the present value of the future minimum lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date of the lease to determine the present value of lease payments. The Company does not recognize right of use assets and lease liabilities for short-term leases that have a lease term of 12 months or less, but rather recognizes the lease payments associated with its short-term leases when incurred.

Payments due under the lease contracts include fixed payments plus, in some instances, variable payments. Variable lease payments, if applicable, associated with the Company’s leases are recognized when the event, activity, or circumstance in the lease agreement on which those payments are assessed occurs. Variable lease payments, when applicable, are presented as “Gathering and other” or “General and administrative” in the unaudited condensed consolidated statements of operations in the same line item as the expense arising from the fixed lease payments on the operating leases.

The “Operating lease right of use assets” outstanding on the unaudited condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022 have initial lease terms ranging from 1.9 to 2.3 years. Payments due under the lease contracts include fixed payments plus, in some instances, variable payments. The table below summarizes the Company’s leases for the periods presented (in thousands, except term and discount rate):


	Nine Months Ended
	September 30,
	2023			2022
Lease cost
Operating lease costs	$	381		$	294
Short-term lease costs		1,022			6,112
Total lease costs	$	1,403		$	6,406

Other information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	381		$	294
Weighted-average remaining lease term - operating leases		1.6	years		1.2	years
Weighted-average discount rate - operating leases		12.13	%		4.29	%

Future minimum lease payments associated with the Company’s non-cancellable operating leases as of September 30, 2023 are presented in the table below (in thousands):


	September 30, 2023
Remaining period in 2023	$	196
2024		522
2025		261
Thereafter		—
Total operating lease payments		979
Less: discount to present value		91
Total operating lease liabilities		888
Less: current operating lease liabilities		513
Noncurrent operating lease liabilities	$	375