Quarterly report pursuant to Section 13 or 15(d)


9 Months Ended
Sep. 30, 2021
Leases [Abstract]  
Nature of Leases
The Company has operating leases on certain equipment and field offices with remaining lease durations in excess of one year. The Company recognizes a right-of-use asset and lease liability on the balance sheet for all leases with lease terms of greater than one year. Short-term leases that have an initial term of one year or less are not capitalized.
The Company has entered into contracts with varying terms for drilling rigs. The Company has concluded its drilling rig contracts are operating leases as the assets are identifiable and the Company has the right to control the identified assets. However, at September 30, 2021, the Company did not have any active long-term drilling rig contracts in place.
The Company rents office space for its corporate headquarters and field locations and certain other equipment from third parties, which expire at various dates through 2022. These agreements are typically structured with non-cancelable terms of one to five years. The Company has determined these agreements represent operating leases with a lease term that equals the primary non-cancelable contract term. The Company has included any renewal options that it has determined are reasonably certain of exercise in the determination of the lease terms. The lease for the Company's corporate headquarters has a primary term of one year and is classified as a short-term operating lease.
Discount Rate
As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company's
incremental borrowing rate reflects the estimated rate of interest that it would pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.
Maturities of operating lease liabilities as of September 30, 2021 were as follows:
(In thousands)
Remaining 2021 $ 10 
2022 25 
Total lease payments $ 35 
Less: Imputed interest (1)
Total $ 34 
The table below summarizes lease cost for the periods presented:
Successor Predecessor
Three Months Ended September 30, 2021 Three Months Ended September 30, 2020
Operating lease cost $ 10  $ 1,692 
Variable lease cost —  245 
Short-term lease cost 2,873  2,259 
Total lease cost(1)
$ 2,883  $ 4,196 
Successor Predecessor
Period from May 18, 2021 through September 30, 2021 Period from January 1, 2021 through May 17, 2021 Nine Months Ended September 30, 2020
Operating lease cost $ 18  $ 41  $ 7,970 
Variable lease cost —  —  705 
Short-term lease cost 5,033  4,496  7,698 
Total lease cost(1)
$ 5,051  $ 4,537  $ 16,373 
The majority of the Company's total lease cost was capitalized to the full cost pool, and the remainder was included in either lease operating expenses or general and administrative expenses in the accompanying consolidated statements of operations.
Supplemental cash flow information related to leases was as follows:
Successor Predecessor
Period from May 18, 2021 through September 30, 2021 Period from January 1, 2021 through May 17, 2021 Nine Months Ended September 30, 2020
Cash paid for amounts included in the measurement of lease liabilities
     Operating cash flows from operating leases $ 46  $ 48  $ 109 
     Investing cash flow from operating leases —  —  9,786 
     Investing cash flow from operating leases—related party —  —  6,800 
The weighted-average remaining lease term as of September 30, 2021 was 0.89 years. The weighted-average discount rate used to determine the operating lease liability as of September 30, 2021 was 3.98%.