Leases |
12 Months Ended |
|---|---|
Dec. 31, 2021 | |
| Leases [Abstract] | |
| Leases | 13. LEASESUnder the leasing standard that became effective January 1, 2019, there are two types of leases: finance and operating. Regardless of the type of lease, the initial measurement of the lease results in recording a ROU asset and a lease liability at the present value of the future lease payments. Practical Expedients – The Company elected to use all the practical expedients, effectively carrying over its previous identification and classification of leases that existed as of January 1, 2019. Additionally, a lessee may elect not to recognize ROU assets and liabilities arising from short-term leases provided there is no purchase option the entity is likely to exercise. The Company has elected this short-term lease exemption. The adoption of ASC 842 resulted in a material increase in the Company’s total assets and liabilities on the Company’s consolidated balance sheet as certain of its operating leases are significant. In addition, adoption resulted in a decrease in working capital as the ROU asset is noncurrent but the lease liability has both long-term and short-term portions. There was no material overall impact on results of operations or cash flows. In the statement of cash flows, operating leases remain an operating activity.The Company is currently a party to several lease agreements for the corporate office, rental of marine vessels and helicopters, warehouse and storage facilities, equipment and the FPSO. The duration for these agreements range from 6 to 39 months. In some cases, the lease contracts require the Company to make payments both for the use of the asset itself and for operations and maintenance services. Only the payments for the use of the asset related to the lease component are included in the calculation of ROU assets and lease liabilities. Payments for the operations and maintenance services are considered non-lease components and are not included in calculating the ROU assets and lease liabilities. For leases on ROU assets used in joint operations, generally the operator reflects the full amount of the lease component, including the amount that will be funded by the non-operators. As operator for the Etame Marin block, the ROU asset recorded for the FPSO, the marine vessels, helicopter, certain equipment and warehouse and storage facilities used in the joint operations includes the gross amount of the lease components.For all leases that contain an option to extend the lease, the Company has evaluated whether it will extend the lease beyond the initial lease term those payments have been included in the calculation for the ROU assets and liabilities. During the third quarter of 2019, the Company notified the lessor of the FPSO of its intent to extend the lease term by the first option that extends the FPSO lease to September 2021. Similarly, during the third quarter of 2020, the Company gave notification to extend the FPSO lease to September 2022.The FPSO agreement also contains options to purchase the assets during or at the end of the lease term. The Company does not consider these options reasonably certain of exercise and has excluded the purchase price from the calculation of ROU assets and lease liabilities. The FPSO and helicopter, marine vessels and certain equipment leases include provisions for variable lease payments, under which the Company is required to make additional payments based on the level of production or the number of days or hours the asset is deployed, or the number of persons onboard the vessel. Because the Company does not know the extent that the Company will be required to make such payments, they are excluded from the calculation of ROU assets and lease liabilities.In August 2021, the Company signed the FSO agreements to lease a FSO to replace the current FPSO whose term will end in September 2022. Under the terms of the Bareboat Contract, a third party is expected to improve the leased vessel in order to comply with the Company’s crude-oil production requirements. The vessel is expected to arrive on location in the Etame Marin block in September 2022 at which time control of the vessel will transfer to the Company.The discount rate used to calculate ROU assets and lease liabilities represents the Company’s incremental borrowing rate. The Company determined this by considering the term and economic environment of each lease, and estimating the resulting interest rate the Company would incur to borrow the lease payments. For the years ended December 31, 2021 and 2020, the components of the lease costs and supplemental information was as follows: Year Ended December 31, 2021 2020Lease cost: (in thousands)Operating lease cost $ 17,692 $ 17,528Short-term lease cost 2,258 1,408Variable lease cost 6,188 7,572Total lease expense 26,138 26,508Lease costs capitalized 232 3,456Total lease costs $ 26,370 $ 29,964 Other information: Cash paid for amounts included in the measurement of lease liabilities: 2021 2020Operating cash flows attributable to operating leases $ 23,925 $ 26,178Weighted-average remaining lease term 0.91 years 1.8 years Weighted-average discount rate 5.91% 6.09% The table below describes the presentation of the total lease cost on the Company’s consolidated statement of operations. As discussed above, the Company’s joint venture owners are required to reimburse the Company for their share of certain expenses, including certain lease costs. Year Ended December 31, 2021 2020 (in thousands)Production expense $ 13,457 $ 7,904General and administrative expense 193 197Lease costs billed to the joint venture owners 12,573 20,692Total lease expense 26,223 28,793Lease costs capitalized 147 1,171Total lease costs $ 26,370 $ 29,964 The following table describes the future maturities of the Company’s operating lease liabilities at December 31, 2021: Lease ObligationYear (in thousands)2022 $ 9,8672023 3622024 1832025 46 10,458Less: imputed interest 229Total lease liabilities $ 10,229 Under the joint operating agreements, other joint venture owners are obligated to fund $4.3 million of the $10.5 million in future lease liabilities as of December 31, 2021. |