NOTE 10 — LEASES

The Company has entered into various non-cancellable operating leases for certain of the Company’s offices, land and various pipeline right-of-way contracts. The Company determines if an arrangement is a lease, or contains a lease, at inception and establishes a right-of-use (“ROU”) asset and lease liability based on the Company’s assumptions of the term, inflation rates and incremental borrowing rates. The Company has elected the short-term practical expedient to not apply the recognition requirements to short-term leases with a term of twelve months or less. The Company has also elected the practical expedient to not separate lease and nonlease components.

The Company’s operating leases include options to extend the lease term, at the Company’s discretion, for an additional two to ten years. The Company is not, however, reasonably certain that it will exercise any of the options to extend these leases and as such, the options have not been included in the remaining lease terms.

The amounts disclosed herein primarily represent costs associated with properties operated by the Company that are presented on a gross basis and do not reflect the Company’s net proportionate share of such amounts. A portion of these costs have been or will be billed to other working interest owners where applicable. The Company’s share of these costs is included in oil and natural gas properties, lease operating expense or general and administrative expense, as applicable. 

The components of lease costs were as follows (in thousands):

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The present value of the fixed lease payments recorded as the Company’s ROU assets and operating lease liabilities, adjusted for initial direct costs and incentives, are as follows (in thousands):

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The weighted average remaining lease term and discount rate related to the Company’s operating leases are as follows (in thousands):

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Supplemental cash flow information related to the Company’s operating leases are as follows (in thousands):

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As of December 31, 2024, the maturities of the liabilities related to the Company’s operating leases are as follows (in thousands):

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