The Company leases various facilities and vehicles under noncancelable 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 five 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 June 30, 2026.

For the three and six months ended June 30, 2026, the components of the Company’s lease expense were as follows (in thousands):


	Three months ended June 30,
	2026		2025
Operating lease cost	$	1,736	$	1,737
Short-term lease cost		33		31
Variable lease cost		174		110
Total Lease Cost	$	1,943	$	1,878


	Six months ended June 30,
	2026		2025
Operating lease cost	$	3,459	$	3,476
Short-term lease cost		65		63
Variable lease cost		326		219
Total Lease Cost	$	3,850	$	3,758

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


	2026			2025
Weighted-average remaining lease term (in years)		7.48			6.89
Weighted average discount rate		8.23	%		7.95	%

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 June 30, 2026 were as follows (in thousands):



2026	$	3,309
2027		5,483
2028		4,812
2029		4,043
2030		3,809
Thereafter		12,731
Total lease payments	$	34,187
Less: imputed interest		(8,996	)
Present value of lease liabilities	$	25,191

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 and six months ended June 30, 2026, tool rental revenue was approximately $29.6 million

and $58.5 million, respectively. For the three and six months ended June 30, 2025, tool rental revenue was approximately $32.8 million and $67.3 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