v3.25.1
Leases
 3 Months Ended
Mar. 31, 2025
Leases [Abstract]  
Leases Leases
Operating Leases
Description of Leases
We have operating leases for five FORCE® electric-powered hydraulic fracturing equipment fleets (the “Electric Fleet Leases”), facilities and office space. The terms and conditions of these leases vary by the type of the underlying asset. We did not account for land separately from buildings under our leases of facilities because we concluded that the accounting effect was insignificant. Our operating leases do not include residual value guarantees, covenants or financial restrictions. Further, our operating leases do not contain variability in payments resulting from either an index change or rate change. We assumed two leases for facilities as part of our acquisition of Silvertip Completion Services Operating, LLC on November 1, 2022. Our operating leases have remaining lease terms of approximately 0.5 years to 3.7 years as of March 31, 2025. Our operating leases have renewal options ranging from none to three renewal options of up to one year each at the end of their current contractual lease periods. Further, our Electric Fleet Leases have options to purchase the underlying equipment at the end of their initial term of approximately three years or at the end of each renewal period. However, in management's judgment the exercise of neither the renewal options nor the purchase options are reasonably assured for any lease. In addition to fixed rent payments, the Electric Fleet Leases contain variable payments based on equipment usage. The right-of-use assets and liabilities related to
the Electric Fleet Leases are included in our Hydraulic Fracturing reportable segment, related to leases for facilities are included in our Hydraulic Fracturing and Wireline reportable segments, and related to office space are included in our Wireline reportable segment and our corporate administrative function.
Our total operating lease right-of-use assets were as follows:
(in thousands)March 31, 2025December 31, 2024
Operating lease right-of-use assets - cost$193,437 $182,130 
Operating lease right-of-use assets - accumulated amortization(63,850)(49,836)
Operating lease right-of-use assets - net$129,587 $132,294 
Finance Leases
Description of Lease
We have a three-year equipment lease contract (the "Power Equipment Lease") for certain power generation equipment. In addition to the contractual lease period, the contract includes an optional renewal for one year, 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 Power Equipment Lease does not contain variability in payments resulting from either an index change or rate change. The right-of-use assets and liabilities under this contract are included in our Hydraulic Fracturing reportable segment.
We accounted for the Power Equipment Lease as a finance lease. This conclusion resulted from the existence of the right to control the use of the assets throughout the lease term, the present value of lease payments being equal to or in excess of substantially all of the fair value of the underlying assets and the lease term being the major part of the remaining economic life of the underlying assets.
Our total finance lease right-of-use assets were as follows:
(in thousands)March 31, 2025December 31, 2024
Finance lease right-of-use assets - cost$54,842 $54,842 
Finance lease right-of-use assets - accumulated amortization(28,979)(24,129)
Finance lease right-of-use assets - net$25,863 $30,713 
Lease Costs
The components of lease costs are as follows:
Three Months Ended March 31,
(in thousands)20252024
Operating lease cost$15,731 $9,036 
Finance lease cost:
Amortization of right-of-use assets4,849 4,526 
Interest on lease liabilities524 814 
Total finance lease cost5,373 5,340 
Variable lease cost904 627 
Short-term lease cost237 199 
Short-Term Leases
We elected the practical expedient option, 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.
Initial Direct Costs
We elected to analogize to the measurement guidance of ASC 360 to capitalize costs incurred to place a leased asset into its intended use and to present such capitalized costs as part of the related lease right-of-use asset cost as initial direct costs. The Company incurred initial direct costs of approximately $0 and $6.1 million during the three months ended March 31, 2025 and 2024, respectively, to place the leased equipment into its intended use, which are included in the right-of-use assets cost related to our Electric Fleet Leases.
Supplemental Cash Flow Information
Supplemental cash flow information related to leases are as follows:
Three Months Ended March 31,
(in thousands)20252024
Cash paid for amounts included in the measurements of lease liabilities:
Operating cash flows from operating leases$11,567 $6,287 
Operating cash flows from finance lease524 814 
Financing cash flows from finance lease4,705 4,154 
Noncash lease obligations arising from obtaining right-of-use assets related to:
Operating leases (1)
11,307 32,402 
Finance lease— — 
(1)During the three months ended March 31, 2025 and 2024, we recorded noncash operating lease obligations arising from obtaining right-of-use assets related to the receipt of equipment under the Electric Fleet Leases.
Lease Terms and Discount Rates
Lease terms and discount rates are as follows:
March 31, 2025December 31, 2024
Weighted average remaining lease term:
Operating leases2.3 years2.4 years
Finance leases1.4 years1.6 years
Weighted average discount rate:
Operating leases6.8 %7.0 %
Finance leases7.3 %7.3 %
The discount rates used for our operating and finance leases are determined based on the weighted average annual interest rate on our ABL Credit Facility effective at the time of inception or modification of each lease.
Maturity Analysis of Lease Liabilities
The maturity analysis of liabilities and reconciliation to undiscounted and discounted remaining future lease payments for our leases as of March 31, 2025 are as follows:
(in thousands)Operating LeasesFinance Leases
2025$36,028 $15,687 
202647,309 13,462 
202721,431 — 
20282,936 — 
2029— — 
Total undiscounted future lease payments107,704 29,149 
Less: amount representing interest(8,335)(1,351)
Present value of future lease payments (lease obligation)$99,369 $27,798 
Leases Leases
Operating Leases
Description of Leases
We have operating leases for five FORCE® electric-powered hydraulic fracturing equipment fleets (the “Electric Fleet Leases”), facilities and office space. The terms and conditions of these leases vary by the type of the underlying asset. We did not account for land separately from buildings under our leases of facilities because we concluded that the accounting effect was insignificant. Our operating leases do not include residual value guarantees, covenants or financial restrictions. Further, our operating leases do not contain variability in payments resulting from either an index change or rate change. We assumed two leases for facilities as part of our acquisition of Silvertip Completion Services Operating, LLC on November 1, 2022. Our operating leases have remaining lease terms of approximately 0.5 years to 3.7 years as of March 31, 2025. Our operating leases have renewal options ranging from none to three renewal options of up to one year each at the end of their current contractual lease periods. Further, our Electric Fleet Leases have options to purchase the underlying equipment at the end of their initial term of approximately three years or at the end of each renewal period. However, in management's judgment the exercise of neither the renewal options nor the purchase options are reasonably assured for any lease. In addition to fixed rent payments, the Electric Fleet Leases contain variable payments based on equipment usage. The right-of-use assets and liabilities related to
the Electric Fleet Leases are included in our Hydraulic Fracturing reportable segment, related to leases for facilities are included in our Hydraulic Fracturing and Wireline reportable segments, and related to office space are included in our Wireline reportable segment and our corporate administrative function.
Our total operating lease right-of-use assets were as follows:
(in thousands)March 31, 2025December 31, 2024
Operating lease right-of-use assets - cost$193,437 $182,130 
Operating lease right-of-use assets - accumulated amortization(63,850)(49,836)
Operating lease right-of-use assets - net$129,587 $132,294 
Finance Leases
Description of Lease
We have a three-year equipment lease contract (the "Power Equipment Lease") for certain power generation equipment. In addition to the contractual lease period, the contract includes an optional renewal for one year, 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 Power Equipment Lease does not contain variability in payments resulting from either an index change or rate change. The right-of-use assets and liabilities under this contract are included in our Hydraulic Fracturing reportable segment.
We accounted for the Power Equipment Lease as a finance lease. This conclusion resulted from the existence of the right to control the use of the assets throughout the lease term, the present value of lease payments being equal to or in excess of substantially all of the fair value of the underlying assets and the lease term being the major part of the remaining economic life of the underlying assets.
Our total finance lease right-of-use assets were as follows:
(in thousands)March 31, 2025December 31, 2024
Finance lease right-of-use assets - cost$54,842 $54,842 
Finance lease right-of-use assets - accumulated amortization(28,979)(24,129)
Finance lease right-of-use assets - net$25,863 $30,713 
Lease Costs
The components of lease costs are as follows:
Three Months Ended March 31,
(in thousands)20252024
Operating lease cost$15,731 $9,036 
Finance lease cost:
Amortization of right-of-use assets4,849 4,526 
Interest on lease liabilities524 814 
Total finance lease cost5,373 5,340 
Variable lease cost904 627 
Short-term lease cost237 199 
Short-Term Leases
We elected the practical expedient option, 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.
Initial Direct Costs
We elected to analogize to the measurement guidance of ASC 360 to capitalize costs incurred to place a leased asset into its intended use and to present such capitalized costs as part of the related lease right-of-use asset cost as initial direct costs. The Company incurred initial direct costs of approximately $0 and $6.1 million during the three months ended March 31, 2025 and 2024, respectively, to place the leased equipment into its intended use, which are included in the right-of-use assets cost related to our Electric Fleet Leases.
Supplemental Cash Flow Information
Supplemental cash flow information related to leases are as follows:
Three Months Ended March 31,
(in thousands)20252024
Cash paid for amounts included in the measurements of lease liabilities:
Operating cash flows from operating leases$11,567 $6,287 
Operating cash flows from finance lease524 814 
Financing cash flows from finance lease4,705 4,154 
Noncash lease obligations arising from obtaining right-of-use assets related to:
Operating leases (1)
11,307 32,402 
Finance lease— — 
(1)During the three months ended March 31, 2025 and 2024, we recorded noncash operating lease obligations arising from obtaining right-of-use assets related to the receipt of equipment under the Electric Fleet Leases.
Lease Terms and Discount Rates
Lease terms and discount rates are as follows:
March 31, 2025December 31, 2024
Weighted average remaining lease term:
Operating leases2.3 years2.4 years
Finance leases1.4 years1.6 years
Weighted average discount rate:
Operating leases6.8 %7.0 %
Finance leases7.3 %7.3 %
The discount rates used for our operating and finance leases are determined based on the weighted average annual interest rate on our ABL Credit Facility effective at the time of inception or modification of each lease.
Maturity Analysis of Lease Liabilities
The maturity analysis of liabilities and reconciliation to undiscounted and discounted remaining future lease payments for our leases as of March 31, 2025 are as follows:
(in thousands)Operating LeasesFinance Leases
2025$36,028 $15,687 
202647,309 13,462 
202721,431 — 
20282,936 — 
2029— — 
Total undiscounted future lease payments107,704 29,149 
Less: amount representing interest(8,335)(1,351)
Present value of future lease payments (lease obligation)$99,369 $27,798