7. LEASES

Our leases primarily consist of operating leases for certain facilities and office spaces in Houston, Texas and Monterrey, Mexico, and financing leases for certain equipment. The Company also leases a marine bunkering site in Galveston, Texas, along with certain equipment on a short-term basis. Leases which are less than twelve months or have no cancellation penalties are not recorded on the Condensed Consolidated Balance Sheets.

For the three months ended  June 30, 2026 and 2025, lease expense that relates to the Company's operating leases, was approximately $2.4 million and $0.1 million, respectively. For the six months ended June 30, 2026 and 2025, lease expense that relates to the Company's operating leases, was approximately $3.9 million and $0.2 million, respectively.

Termination of Time Charter Agreement - Marine Bunkering Vessel

On December 12, 2025, the Company entered into a time charter agreement for a marine bunkering vessel (the "Garibaldi") commencing March 1, 2026 (the "time charter"). The Company determined that the time charter represented an operating lease and the Company recorded a right-of-use ("ROU") asset and lease liability of $22.4 million and $21.8 million, respectively on March 1, 2026. On June 11, 2026, the Company and the owners of the Garibaldi entered into a termination option granting the owners an option to terminate the time charter. On June 24, 2026, the owners exercised that option, and the time charter was terminated. In connection with the termination, the Company incurred a loss on lease cancellation of $1.3 million which is included in "Time charter expense" on the Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2026. The loss on lease cancellation includes an early termination fee of $0.8 million payable  January 1, 2027 and write-off of the remaining balance of the ROU asset of $0.6 million after derecognizing the Company's ROU asset equal to the cancellation of $18.4 million of lease obligations. The Company also expensed $1.1 million of deferred rent and operating costs for the Garibaldi, payable during the third quarter of 2026. At  June 30, 2026, the Company no longer has any ROU asset related to the Garibaldi and the remaining payments and termination fee totaling $1.9 million are included in accounts payable on the Company's Condensed Consolidated Balance Sheet at June 30, 2026.

The following table summarizes the supplemental cash flow information related to leases for the six months ended June 30, 2026 and 2025 (in thousands):