14. LEASES
Lessee. The Partnership has entered into operating leases for equipment supporting the Partnership’s operations, corporate offices, field offices, and easements, with both Occidental and third parties as lessors. The Partnership has also entered into finance leases with third parties for equipment, vehicles, and an NGLs pipeline in Wyoming.
The following table summarizes information related to the Partnership’s leases:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
| | December 31, | | |
| | 2025 | | 2024 | | |
| thousands except lease terms and discount rates | | Operating Leases | | Finance Leases | | Operating Leases | | Finance Leases | | |
| Assets | | | | | | | | | | |
| Other assets | | $ | 187,916 | | | $ | — | | | $ | 219,500 | | | $ | — | | | |
| Net property, plant, and equipment | | — | | | 20,071 | | | — | | | 33,771 | | | |
Total lease assets (1) | | $ | 187,916 | | | $ | 20,071 | | | $ | 219,500 | | | $ | 33,771 | | | |
| | | | | | | | | | | |
| Liabilities | | | | | | | | | | |
| Accrued liabilities | | $ | 65,295 | | | $ | — | | | $ | 58,897 | | | $ | — | | | |
| Short-term debt | | — | | | 8,620 | | | — | | | 10,956 | | | |
| Other liabilities | | 110,126 | | | — | | | 143,801 | | | — | | | |
| Long-term debt | | — | | | 12,425 | | | — | | | 23,329 | | | |
Total lease liabilities (1) | | $ | 175,421 | | | $ | 21,045 | | | $ | 202,698 | | | $ | 34,285 | | | |
| | | | | | | | | | | |
| Weighted-average remaining lease term (years) | | 4 | | 4 | | 4 | | 5 | | |
| Weighted-average discount rate (%) | | 5.1 | | | 6.8 | | | 5.7 | | | 7.0 | | | |
________________________________________________________________________________________
(1)Includes additions to ROU assets and lease liabilities of $24.6 million and $154.1 million related to operating leases for the years ended December 31, 2025 and 2024, respectively. Includes additions to ROU assets and lease liabilities of $3.4 million and $4.3 million related to finance leases for the years ended December 31, 2025 and 2024, respectively.
14. LEASES
The following table summarizes the Partnership’s lease cost:
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
| | Year Ended December 31, | | |
| thousands | | 2025 | | 2024 | | 2023 | | |
| Operating lease cost | | $ | 65,379 | | | $ | 17,086 | | | $ | 15,457 | | | |
| Short-term lease cost | | 9,185 | | | 58,838 | | | 48,343 | | | |
| Variable lease cost | | 3,501 | | | 3,773 | | | 3,930 | | | |
| Sublease income | | (545) | | | (587) | | | (311) | | | |
| Finance lease cost | | | | | | | | |
| Amortization of ROU assets | | 7,017 | | | 7,433 | | | 3,487 | | | |
| Interest on lease liabilities | | 2,182 | | | 2,573 | | | 1,083 | | | |
| Total lease cost | | $ | 86,719 | | | $ | 89,116 | | | $ | 71,989 | | | |
The following table summarizes cash paid for amounts included in the measurement of lease liabilities:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | Year Ended December 31, | |
| | 2025 | | 2024 | | 2023 | |
| thousands | | Operating Leases | | Finance Leases | | Operating Leases | | Finance Leases | | Operating Leases | | Finance Leases | |
| Operating cash flows | | $ | 61,933 | | | $ | 2,156 | | | $ | 15,627 | | | $ | 2,573 | | | $ | 14,217 | | | $ | 1,083 | | |
| Financing cash flows | | — | | | 16,628 | | | — | | | 6,065 | | | — | | | 3,076 | | |
The following table reconciles the undiscounted cash flows to the operating and finance lease liabilities at December 31, 2025:
| | | | | | | | | | | | | | | |
| | | | | |
| | | Operating Leases | | Finance Leases | |
| 2026 | | $ | 66,355 | | | $ | 8,760 | | |
| 2027 | | 69,876 | | | 5,270 | | |
| 2028 | | 13,438 | | | 4,986 | | |
| 2029 | | 12,249 | | | 3,889 | | |
| 2030 | | 10,925 | | | — | | |
| Thereafter | | 26,777 | | | — | | |
| Total lease payments | | 199,620 | | | 22,905 | | |
| Less portion representing imputed interest | | 24,199 | | | 1,860 | | |
| Total lease liabilities | | $ | 175,421 | | | $ | 21,045 | | |
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.