Note 11 - Lease Obligations

3 Months Ended

Mar. 31, 2025

(11)

Lease Obligations

Lease Obligations

Office Lease. We maintain our corporate headquarters in Houston, Texas. In October 2024, BDSC signed a new 24-month extension, the sixth amendment, to its operating lease. The sixth amendment was deemed to be a separate contract and not a lease modification.

An Affiliate, LEH, sub-leases a portion of the Houston office space. BDSC received sub-lease income from LEH totaling $0.03 million for both three months ended March 31, 2025 and 2024. See “Notes ( 3)” to our consolidated financial statements for additional disclosures related to the Affiliate sub-lease.

Tank Lease. LE leases tanks from Ingleside under the Second Amended and Restated Master Services Agreement. Lease expense associated with the Second Amended and Restated Master Services Agreement totaled $0.3 million for both the three months ended March 31, 2025 and 2024. Due to its one-year term, the lease is being treated as short term. As a result, the lease was not recorded on our balance sheet. See “Note ( 3)” to our consolidated financial statements for additional disclosures related to the Second Amended and Restated Master Services Agreement.

The following table presents the lease-related assets and liabilities recorded on the consolidated balance sheet:

			March 31,			December 31
	Balance Sheet Location	2025			2024
		(in thousands)
Assets
Operating lease ROU assets	Operating lease ROU assets	$	497		$	497
Less: Accumulated amortization on operating lease assets	Operating lease ROU assets		(106	)		(41	)

Total lease assets			391			456

Liabilities
Current
Operating lease	Current portion of lease liabilities		268			264

Noncurrent
Operating lease	Long-term lease liabilities, net of current		147			191
Total lease liabilities		$	415		$	455

Weighted average remaining lease term in years
Operating lease		1.42
Weighted average discount rate
Operating lease		8.25%

The following table presents information related to lease costs incurred for operating and finance leases:

	Three Months Ended
	March 31,
	2025		2024
	(in thousands)

Operating lease costs	$	64	$	62
Short-term lease expense, related party		300		300
Total lease cost	$	364	$	362

The table below presents supplemental cash flow information related to leases as follows:

	Three Months Ended
	March 31,
	2025		2024
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating lease	$	72	$	54

As of March 31, 2025, maturities of lease liabilities for the periods indicated was as follows:

March 31,	Operating Lease
	(in thousands)

2025	$	224
2026		191
	$	415

Future minimum annual lease commitments that are non-cancelable:

March 31,	Operating Lease
	(in thousands)

2025	$	224
2026		191
	$	415

BLUE DOLPHIN ENERGY CO 10-Q