Quarterly report pursuant to Section 13 or 15(d)

Leases

Leases

6 Months Ended

Jun. 30, 2020

Lease Arrangements and Supplemental Disclosures

We generally have lease arrangements for office facilities and certain office equipment, certain field equipment including compressors, drilling rigs, crude oil storage tank capacity, land easements and similar arrangements for rights-of-way, and certain gas gathering and gas lift assets. Our short-term leases included in the disclosures below are primarily comprised of our contractual arrangements with certain vendors for operated drilling rigs, crude oil storage tank capacity and our field compressors. During April 2020, we released our drilling rigs. Our primary variable lease was represented by our field gas gathering and gas lift agreement with a midstream service provider and the lease payments are charged on a volumetric basis at a contractual fixed rate.

The following table summarizes the components of our total lease cost for the periods presented:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Operating lease cost	$	220	$	194	$	430	$	357
Short-term lease cost	4,595		11,484		15,891		23,055
Variable lease cost	4,990		5,548		10,647		10,643
Less: Amounts charged as drilling costs ¹	(3,710)		(10,790)		(14,331)		(21,641)
Total lease cost recognized in the Condensed Consolidated Statement of Operations ²	$	6,095	$	6,436	$	12,637	$	12,414

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¹Represents the combined gross amounts paid and (i) capitalized as drilling costs for our working interest share and (ii) billed to joint interest partners for their working interest share for short-term leases of operated drilling rigs.

²Includes $2.8 million and $2.9 million and $5.6 million and $5.0 million recognized in Gathering, processing and transportation expense (“GPT”), $3.0 million and $ 3.3 million and $6.6 million and $7.1 million recognized in Lease operating expense (“LOE”) for the three and six months ended June 30, 2020 and 2019, respectively, and $0.2 million and $0.4 million recognized in General and administrative expense (“G&A”) for each of the three and six months ended June 30, 2020 and 2019, respectively.

The following table summarizes supplemental cash flow information related to leases for the periods presented:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	253	$	182	$	471	$	221
ROU assets obtained in exchange for lease obligations:
Operating leases ¹	$	—	$	753	$	306	$	3,325

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¹Includes $2.5 million recognized upon the adoption of Accounting Standards Codification Topic 842 (“ASC842”) in 2019.

The following table summarizes supplemental balance sheet information related to leases as of the dates presented:


	June 30,			December 31,
	2020			2019
ROU assets – operating leases	$	2,734		$	2,740
Current operating lease obligations	$	886		$	847
Noncurrent operating lease obligations	2,142			2,232
Total operating lease obligations	$	3,028		$	3,079
Weighted-average remaining lease term – operating leases	3.6 years			4.1 years
Weighted-average discount rate – operating leases	3.25		%	5.97		%
Remaining maturities of operating lease obligations as of June 30, 2020:
2020	$	429
2021	894
2022	874
2023	872
2024 and thereafter	145
Total undiscounted lease payments	3,214
Less: imputed interest	(186)
Total operating lease obligations	$	3,028