Lessee
We lease a wide variety of facilities and equipment including land and building space, office and field equipment, storage facilities and transportation equipment. Our remaining lease terms range from less than one year to 93 years. Most long-term leases include renewal options ranging from one year to 40 years and, in certain leases, also include purchase options. The lease term included in the measurement of right of use assets and lease liabilities includes options to extend or terminate our leases that we are reasonably certain to exercise.
Under ASC 842, the components of lease cost are shown below. Lease costs for operating leases are recognized on a straight-line basis and are reflected in the income statement based on the leased asset’s use. Lease costs for finance leases are reflected in depreciation and amortization and in net interest and other financial costs.
| | | | | | | | | | | | | | | | | |
| (Millions of dollars) | 2025 | | 2024 | | 2023 |
| Finance lease cost: | | | | | |
| Amortization of right of use assets | $ | 102 | | | $ | 80 | | | $ | 73 | |
| Interest on lease liabilities | 33 | | | 26 | | | 25 | |
| Operating lease cost | 541 | | | 534 | | | 489 | |
| Variable lease cost | 68 | | | 60 | | | 54 | |
| Short-term lease cost | 964 | | | 952 | | | 881 | |
| Total lease cost | $ | 1,708 | | | $ | 1,652 | | | $ | 1,522 | |
Supplemental consolidated balance sheet data related to leases were as follows:
| | | | | | | | | | | |
| December 31, |
| (Millions of dollars) | 2025 | | 2024 |
| Operating leases | | | |
| Assets | | | |
| Right of use assets | $ | 1,493 | | | $ | 1,300 | |
| Liabilities | | | |
| Operating lease liabilities | $ | 489 | | | $ | 417 | |
| Long-term operating lease liabilities | 993 | | | 860 | |
| Total operating lease liabilities | $ | 1,482 | | | $ | 1,277 | |
| | | |
| Weighted average remaining lease term (in years) | 4 | | 4 |
| Weighted average discount rate | 4.5 | % | | 4.4 | % |
| | | |
| Finance leases | | | |
| Assets | | | |
| Property, plant and equipment, gross | $ | 1,183 | | | $ | 1,118 | |
| Less accumulated depreciation | 608 | | | 510 | |
| Property, plant and equipment, net | $ | 575 | | | $ | 608 | |
| Liabilities | | | |
| Debt due within one year | $ | 105 | | | $ | 94 | |
| Long-term debt | 590 | | | 630 | |
| Total finance lease liabilities | $ | 695 | | | $ | 724 | |
| | | |
| Weighted average remaining lease term (in years) | 8 | | 9 |
| Weighted average discount rate | 4.8 | % | | 4.8 | % |
As of December 31, 2025, maturities of lease liabilities for operating lease obligations and finance lease obligations having initial or remaining non-cancellable lease terms in excess of one year are as follows:
| | | | | | | | | | | |
| (Millions of dollars) | Operating | | Finance |
| 2026 | $ | 544 | | | $ | 135 | |
| 2027 | 397 | | | 123 | |
| 2028 | 288 | | | 108 | |
| 2029 | 172 | | | 90 | |
| 2030 | 98 | | | 79 | |
| 2031 and thereafter | 128 | | | 312 | |
| Gross lease payments | 1,627 | | | 847 | |
| Less: imputed interest | 145 | | | 152 | |
| Total lease liabilities | $ | 1,482 | | | $ | 695 | |
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.