The Company leases various facilities and vehicles under non-cancelable operating lease agreements. The remaining lease terms for our leases range from 1 month to 14 years. These leases often include options to extend the term of the lease which may be for periods of up to 5 years. When it is reasonably certain that the option will be exercised, the impact of the renewal term is included in the lease term for purposes of determining total future lease payments and measuring the ROU asset and lease liability. We apply the short-term lease policy election, which allows us to exclude from recognition leases with an original term of 12 months or less. We have not entered into any finance leases as of March 31, 2025.

For the three months ended March 31, 2025 and 2024, the components of the Company’s lease expense were as follows (in thousands):


	Three months ended March 31, 2025		Three months ended March 31, 2024
Operating Lease Cost	$	1,739	$	1,482
Short-term Lease Cost		31		35
Variable Lease Cost		109		88
Total Lease Cost	$	1,879	$	1,605

Supplemental balance sheet information related to leases was as follows (in thousands):


	Three months ended March 31, 2025			Three months ended March 31, 2024
Weighted-average remaining lease term (in years)		7.15			6.45
Weighted average discount rate		7.73	%		5.86	%

Future undiscounted cash flows for each of the next five years and thereafter and reconciliation to the lease liabilities recognized on the unaudited condensed consolidated balance sheet as of March 31, 2025 were as follows (in thousands):



2025	$	4,338
2026		5,416
2027		4,354
2028		3,635
2029		3,025
Thereafter		10,595
Total lease payments	$	31,363
Less: imputed interest		(7,461	)
Present value of lease liabilities	$	23,902

The Company leases downhole drilling tools to companies in the oil and natural gas industry. Such leases are accounted for in accordance with ASC 842. For the three months ended March 31, 2025 and 2024, tool rental revenue for leases of downhole drilling tools was approximately $34.5 million and $30.0 million, respectively. Our lease contract periods are short-term in nature and are typically daily, monthly, per well, or footage based. Due to the short-term nature of the contracts, no maturity table is presented.

NOTE 13 – LEASES