WaterBridge Infrastructure LLC Leases Disclosure
9. Leases
Our leased assets consist primarily of office and facility spaces, and leased vehicles. Our operating leases consist of office spaces. Our finance leases consists primarily of leased vehicles, and field facility leases. Leases are recognized on our consolidated balance sheets by recording a lease liability representing the obligation to make future lease payments and a right-of-use asset representing the right to use the underlying asset for the lease term. As our leases generally do not provide an implicit rate, in order to calculate the lease liability, we discount our expected future lease payments using our incremental borrowing rate. The incremental borrowing rate is an estimate of the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term to that of the lease term. Options to renew a lease are included in the lease term and recognized as part of the right-of-use asset and lease liability when they are reasonably certain to be exercised.
We have elected the practical expedient to omit leases with an initial term of 12 months or less (“short-term lease”) from recognition on the balance sheet. We recognize short-term lease payments on a straight-line basis over the lease term and variable payments under short-term leases in the period in which the obligation is incurred.
Certain of our leases contain non-lease components which are not separated from the lease components when calculating the right-of-use asset and lease liability per our use of the practical expedient to combine both components of an arrangement for all classes of leased assets.
Certain of our leases also contain variable payments, such as inflation, that are not included when calculating the right-of-use asset and lease liability unless the payments are in-substance fixed.
Lease expense for finance leases is recognized as the sum of the amortization of the right-of-use assets on a straight-line basis and the interest on lease liabilities using the effective interest method over the lease term. We recognize lease expense for operating leases on a straight-line basis over the lease term.
The following table shows the classification and location of our right-of-use assets and lease liabilities on our consolidated balance sheets:
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December 31, |
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Consolidated Balance Sheets Location |
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2025 |
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2024 |
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Operating Leases |
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Right-of-use assets-operating |
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$ |
6,537 |
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$ |
- |
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Current operating lease liabilities |
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|
777 |
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|
- |
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|
Non-current operating lease liabilities |
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5,774 |
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|
- |
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|
Total lease liabilities |
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$ |
6,551 |
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$ |
- |
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Finance Leases |
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Right-of-use assets-financing |
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$ |
5,009 |
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$ |
4,153 |
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Current finance lease liabilities |
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1,045 |
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1,322 |
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Non-current finance lease liabilities |
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1,627 |
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|
2,826 |
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Total lease liabilities |
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$ |
2,672 |
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$ |
4,148 |
|
The following table shows the classification and location of our lease costs on our consolidated statements of operations:
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Year Ended December 31, |
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Consolidated Statements of Operations Location |
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2025 |
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2024 |
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2023 |
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Operating lease cost: |
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Operating lease cost |
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Direct operating costs |
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$ |
347 |
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$ |
- |
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$ |
- |
|
Short term lease costs |
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Direct operating costs |
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|
715 |
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- |
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- |
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Total operating lease costs |
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$ |
1,062 |
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$ |
- |
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$ |
- |
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Finance lease cost: |
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Amortization of right-of-use assets |
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Depreciation, depletion, amortization, and accretion |
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$ |
1,429 |
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$ |
1,352 |
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$ |
1,044 |
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Interest on lease liabilities |
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Interest expense, net |
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|
283 |
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|
318 |
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|
240 |
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Total finance lease costs |
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$ |
1,712 |
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$ |
1,670 |
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$ |
1,284 |
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Variable lease cost was $0.1 million year ended December 31, 2025.
Future annual minimum lease payments for operating and finance leases as of December 31, 2025 are as follows:
Year Ending December 31, |
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Operating |
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Finance |
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2026 |
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$ |
1,341 |
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$ |
1,227 |
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2027 |
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1,363 |
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1,025 |
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2028 |
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1,306 |
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|
474 |
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2029 |
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1,274 |
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|
146 |
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2030 |
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|
984 |
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|
137 |
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Thereafter |
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2,639 |
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- |
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Total lease payments |
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8,907 |
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|
3,009 |
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Less: Interest |
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(2,356 |
) |
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(337 |
) |
Present value of lease liabilities |
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$ |
6,551 |
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$ |
2,672 |
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The following table shows the weighted-average remaining lease term and the weighted-average discount rate for our operating and finance leases:
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December 31, |
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2025 |
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2024 |
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Operating Leases |
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Weighted-average remaining lease term (in years) |
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6.83 |
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- |
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Weighted-average discount rate |
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9.10 |
% |
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- |
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Finance Leases |
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Weighted-average remaining lease term (in years) |
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2.75 |
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3.21 |
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Weighted-average discount rate |
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8.27 |
% |
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|
7.95 |
% |
The following table includes other quantitative information for our operating and finance leases:
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Year Ended December 31, |
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2025 |
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2024 |
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2023 |
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Cash paid for amounts included in the measurement of lease liabilities: |
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Operating cash flows from operating leases |
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$ |
333 |
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$ |
- |
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$ |
- |
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Financing cash flows from finance leases |
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$ |
3,742 |
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$ |
1,148 |
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$ |
862 |
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Operating cash flows from finance leases |
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$ |
283 |
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$ |
318 |
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$ |
240 |
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Right-of-use assets obtained in exchange for operating lease liabilities |
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$ |
6,732 |
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$ |
- |
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$ |
- |
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Right-of-use assets obtained in exchange for finance lease liabilities |
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$ |
3,018 |
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$ |
1,764 |
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$ |
3,243 |
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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.