Quarterly report pursuant to Section 13 or 15(d)

Leases

v3.21.2
Leases
6 Months Ended
Jun. 30, 2021
Leases [Abstract]  
Leases Leases
Operating Leases
 Description of Lease
          In March 2013, we entered into a ten year real estate lease contract (the "Real Estate Lease") with a commencement date of April 1, 2013, as part of the expansion of our equipment yard. The lease is with an entity in which a former director of the Company has a noncontrolling equity ownership interest. During the six months ended June 30, 2021 and 2020, the Company made lease payments of approximately $0.1 million and $0.2 million, respectively. The assets and liabilities under this contract are equally allocated between our cementing and coiled tubing segments. In addition to the contractual lease period, the contract includes an optional renewal of up to ten years, and in management's judgment the exercise of the renewal option is not reasonably assured. The contract does not include a residual value guarantee, covenants or financial restrictions. Further, the Real Estate Lease does not contain variability in payments resulting from either an index change or rate change. Effective January 1, 2019, the remaining lease term in our present value estimate of the minimum future lease payments was four years.
         We accounted for our Real Estate Lease to be an operating lease. Our assumptions resulted from the existence of the right to control the use of the assets throughout the lease term. We did not account for the land separately from the building of the real estate lease because we concluded that the accounting effect was insignificant. As of June 30, 2021, the weighted average discount rate and remaining lease term was 6.7% and 1.8 years, respectively.
          As of June 30, 2021, the total operating lease right-of-use asset cost was approximately $1.2 million, and accumulated amortization was approximately $0.7 million.  As of December 31, 2020, our total operating lease right-of-use asset cost was approximately $1.2 million, and accumulated amortization was $0.5 million. For the six months ended June 30, 2021 and 2020, we recorded operating lease cost of approximately $0.2 million and $0.2 million, respectively, in our statement of operations.
Finance Leases
Description of Ground Lease
          In 2018, we entered into a ten year land lease contract (the "Ground Lease") with an exclusive option to purchase the land exercisable beginning one year from the commencement date of October 1, 2018 through the end of the contractual lease term. In March 2020, the Company exercised its option and purchased the land associated with the Ground Lease for approximately $2.5 million.
Maturity Analysis of Lease Liabilities
          The maturity analysis of liabilities and reconciliation to undiscounted and discounted remaining future lease payments for our operating lease as of June 30, 2021 are as follows:
($ in thousands) Totals
2021 $ 190 
2022 389 
2023 98 
Total undiscounted future lease payments 677 
Less: amount representing interest (40)
Present value of future lease payments (lease obligation) $ 637 
          The total cash paid for amounts included in the measurement of our operating lease liability during the six months ended June 30, 2021 was approximately $0.1 million. During the six months ended June 30, 2020, total cash paid for amounts included in the measurement of our operating and finance lease liabilities was approximately $0.2 million and $0.03 million, respectively.
Short-Term Leases
          We elected the practical expedient, consistent with ASC 842, to exclude leases with an initial term of twelve months or less ("short-term lease") from our balance sheet and continue to record short-term leases as a period expense. For the six months ended June 30, 2021 and 2020 our short-term lease expense was approximately $0.3 million and $0.6 million, respectively.
          In April 2021, we entered into a short-term lease arrangement to lease our gas turbine (the "Equipment Lease"') with a commencement date of June 1, 2021 through September 30, 2021. We have classified the Equipment Lease as an operating lease, and during the six months ended June 30, 2021, we recognized approximately $0.8 million in lease income recorded as part of our pressure pumping segment revenue on our statements of operations, and future lease income, which will be ratably recognized over the remaining lease period, is approximately $2.3 million.
Leases Leases
Operating Leases
 Description of Lease
          In March 2013, we entered into a ten year real estate lease contract (the "Real Estate Lease") with a commencement date of April 1, 2013, as part of the expansion of our equipment yard. The lease is with an entity in which a former director of the Company has a noncontrolling equity ownership interest. During the six months ended June 30, 2021 and 2020, the Company made lease payments of approximately $0.1 million and $0.2 million, respectively. The assets and liabilities under this contract are equally allocated between our cementing and coiled tubing segments. In addition to the contractual lease period, the contract includes an optional renewal of up to ten years, and in management's judgment the exercise of the renewal option is not reasonably assured. The contract does not include a residual value guarantee, covenants or financial restrictions. Further, the Real Estate Lease does not contain variability in payments resulting from either an index change or rate change. Effective January 1, 2019, the remaining lease term in our present value estimate of the minimum future lease payments was four years.
         We accounted for our Real Estate Lease to be an operating lease. Our assumptions resulted from the existence of the right to control the use of the assets throughout the lease term. We did not account for the land separately from the building of the real estate lease because we concluded that the accounting effect was insignificant. As of June 30, 2021, the weighted average discount rate and remaining lease term was 6.7% and 1.8 years, respectively.
          As of June 30, 2021, the total operating lease right-of-use asset cost was approximately $1.2 million, and accumulated amortization was approximately $0.7 million.  As of December 31, 2020, our total operating lease right-of-use asset cost was approximately $1.2 million, and accumulated amortization was $0.5 million. For the six months ended June 30, 2021 and 2020, we recorded operating lease cost of approximately $0.2 million and $0.2 million, respectively, in our statement of operations.
Finance Leases
Description of Ground Lease
          In 2018, we entered into a ten year land lease contract (the "Ground Lease") with an exclusive option to purchase the land exercisable beginning one year from the commencement date of October 1, 2018 through the end of the contractual lease term. In March 2020, the Company exercised its option and purchased the land associated with the Ground Lease for approximately $2.5 million.
Maturity Analysis of Lease Liabilities
          The maturity analysis of liabilities and reconciliation to undiscounted and discounted remaining future lease payments for our operating lease as of June 30, 2021 are as follows:
($ in thousands) Totals
2021 $ 190 
2022 389 
2023 98 
Total undiscounted future lease payments 677 
Less: amount representing interest (40)
Present value of future lease payments (lease obligation) $ 637 
          The total cash paid for amounts included in the measurement of our operating lease liability during the six months ended June 30, 2021 was approximately $0.1 million. During the six months ended June 30, 2020, total cash paid for amounts included in the measurement of our operating and finance lease liabilities was approximately $0.2 million and $0.03 million, respectively.
Short-Term Leases
          We elected the practical expedient, consistent with ASC 842, to exclude leases with an initial term of twelve months or less ("short-term lease") from our balance sheet and continue to record short-term leases as a period expense. For the six months ended June 30, 2021 and 2020 our short-term lease expense was approximately $0.3 million and $0.6 million, respectively.
          In April 2021, we entered into a short-term lease arrangement to lease our gas turbine (the "Equipment Lease"') with a commencement date of June 1, 2021 through September 30, 2021. We have classified the Equipment Lease as an operating lease, and during the six months ended June 30, 2021, we recognized approximately $0.8 million in lease income recorded as part of our pressure pumping segment revenue on our statements of operations, and future lease income, which will be ratably recognized over the remaining lease period, is approximately $2.3 million.