We are a lessee under various agreements for drilling rigs, pressure pumping equipment, vehicles, office space, compressors and other equipment under non-cancelable operating leases expiring through 2036. Certain of our lease agreements include options to renew the lease, terminate the lease early or purchase the underlying asset at the end of the lease. We determine the lease term at the lease commencement date as the non-cancelable period of the lease, including options to extend or terminate the lease when we are reasonably certain to exercise the option. The Company’s vehicles are the only leases with renewal options that we are reasonably certain to exercise. The renewals are reflected in the right of use (“ROU”) asset and lease liability balances. Regarding our drilling rigs and pressure pumping equipment, our policy is to treat both lease and non-lease components as a single lease component.
Our operating ROU assets are included in other long-term assets while operating lease liabilities are included in other current and other long-term liabilities on the consolidated balance sheets. Our total lease costs are recognized within proved natural gas and oil properties, production expenses and general and administrative expenses within our consolidated financial statements.
The following table presents our ROU assets and lease liabilities as of December 31, 2025 and 2024. As of December 31, 2025 and 2024, we did not have any finance leases.
| | | | | | | | | | | | | | |
| | Operating Leases |
| | | December 31, 2025 | | December 31, 2024 |
| ROU assets | | $ | 99 | | | $ | 145 | |
| | | | |
| Lease liabilities: | | | | |
| Current lease liabilities | | $ | 51 | | | $ | 71 | |
| Long-term lease liabilities | | 48 | | | 74 | |
| Total lease liabilities, net | | $ | 99 | | | $ | 145 | |
Additional information for the Company’s operating leases is presented below:
| | | | | | | | | | | | | | | | | | | | |
| | Years Ended December 31, |
| | | 2025 | | 2024 | | 2023 |
| Lease cost: | | | | | | |
| | | | | | |
| Operating lease cost | | $ | 91 | | | $ | 88 | | | $ | 107 | |
| Short-term lease cost | | 45 | | | 62 | | | 40 | |
| Total lease cost | | $ | 136 | | | $ | 150 | | | $ | 147 | |
| | | | | | |
| Other information: | | | | | | |
| Operating cash outflows from operating leases | | $ | 32 | | | $ | 13 | | | $ | 10 | |
| Investing cash outflows from operating leases | | $ | 104 | | | $ | 137 | | | $ | 137 | |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 31, 2025 | | December 31, 2024 |
| Weighted average remaining lease term - operating leases | | 2.49 years | | 3.03 years |
| Weighted average discount rate - operating leases | | 5.77 | % | | 5.99 | % |
Maturity analysis of operating lease liabilities is presented below:
| | | | | | | | |
| | December 31, 2025 |
| 2026 | | $ | 51 | |
| 2027 | | 34 | |
| 2028 | | 15 | |
| 2029 | | 6 | |
| 2030 | | — | |
| Thereafter | | 1 | |
| Total lease payments | | 107 | |
| Less imputed interest | | (8) | |
| Present value of lease liabilities | | 99 | |
| Less current maturities | | (51) | |
| Present value of lease liabilities, less current maturities | | $ | 48 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.