Certain enforceable vessel charters and pipeline capacity agreements are classified as finance leases, and the right-of-use assets are included in property and equipment, net on the consolidated balance sheets. Lease obligations are recognized based on the rate implicit in the lease or the Company’s incremental borrowing rate at lease commencement.

As of March 31, 2025, the Company was a lessee in finance lease arrangements on one pipeline capacity agreement and one tugboat. These arrangements were determined to be finance leases as their terms represent the majority of the economic life of their respective assets.

Finance lease liabilities as of March 31, 2025 and December 31, 2024 consisted of the following (in thousands):


	March 31, 2025			December 31, 2024
Finance lease liabilities	$	186,074		$	191,383
Less current portion of finance lease liabilities		(23,841	)		(23,475	)
Finance lease liabilities, long-term	$	162,233		$	167,908

Operating lease right-of-use assets are included within other assets on the consolidated balance sheets. The current and non-current portions of operating lease liabilities are included within accrued liabilities and other liabilities and other long-term liabilities, respectively, on the consolidated balance sheets.

Additionally, the Company has operating leases for offices in various locations in which operations are performed. Such leases will often include options to extend the lease and the Company will include option periods that, on commencement date, it is reasonably certain the Company will exercise. Variable lease costs relate to certain lease agreements, which include payments that vary for items such as inflation adjustments, or common area charges. Variable lease costs that are not dependent on an index are excluded from the lease payments that comprise the operating lease liability and are expensed in the period in which they are incurred. None of the Company’s operating leases contain any residual value guarantees.

A maturity analysis of the Company’s operating and finance lease liabilities (excluding short-term leases) at March 31, 2025 is as follows (in thousands):


Year	Operating			Finance
Remainder of 2025	$	1,319		$	24,926
2026		1,512			33,235
2027		1,116			33,235
2028		982			27,584
2029		544			27,571
Thereafter		16			85,581
Total lease payments	$	5,489		$	232,132
Less: imputed interest		(583	)		(46,058	)
Carrying value of lease liabilities		4,906			186,074
Less: current portion		(1,481	)		(23,841	)
Carrying value of long-term lease liabilities	$	3,425		$	162,233

As of March 31, 2025, the Company’s weighted average remaining lease term for operating and finance leases was 3.6 years and 7.8 years, respectively, with a weighted average discount rate of 6.2% and 6.3%, respectively. As of December 31, 2024, the Company’s weighted average remaining lease term for operating and finance leases was 3.6 years and 8.1 years, respectively, with a weighted average discount rate of 6.2% and 6.3%, respectively.

The Company’s total lease costs for the three months ended March 31, 2025 and 2024 recognized in the consolidated statements of income consisted of the following (in thousands):


	For the three months ended March 31,
	2025		2024
Amortization of finance lease right-of-use assets	$	652	$	652
Interest on finance lease liabilities		2,961		3,282
Operating lease expense		481		449
Short-term lease expense		157		253
Total lease costs	$	4,251	$	4,636

Other information related to leases for the three months ended March 31, 2025 and 2024 are as follows (in thousands):


	For the three months ended March 31,
	2025		2024
Operating cash flows for finance leases	$	2,961	$	3,282
Financing cash flows for finance leases		5,309		5,001
Operating cash flows for operating leases		474		520