Annual report pursuant to Section 13 and 15(d)

LEASED PROPERTIES AND LEASES

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LEASED PROPERTIES AND LEASES
 12 Months Ended
Dec. 31, 2023
Leases [Abstract]  
LEASED PROPERTIES AND LEASES LEASED PROPERTIES AND LEASES
Prior to 2021, the Company primarily acquired midstream and downstream assets in the U.S. energy sector such as pipelines, storage terminals, and gas and electric distribution systems, and, historically, leased many of these assets to operators under triple-net leases. The Company's leased property was classified as an operating lease and was recorded as leased property in the Consolidated Balance Sheets. Base rent related to the Company's leased property was recognized on a straight-line basis over the term of the lease when collectability was probable. Participating rent was recognized when it was earned, based on the achievement of specified performance criteria. Base and participating rent were recorded as lease revenue in the Consolidated Statements of Operations. The Company regularly evaluated the collectability of any deferred rent receivable on a lease-by-lease basis. The evaluation primarily included assessment of the financial condition and credit quality of the Company's tenants, changes in tenants' payment history and current economic factors. When the collectability of the deferred rent receivable or future lease payments were no longer probable, the Company recognized a write-off of the deferred rent receivable as a reduction of revenue in the Consolidated Statements of Operations.
The Company divested the last of its material leased assets, including GIGS on February 4, 2021.
LESSOR - LEASED PROPERTIES
Beginning in 2019, the Company concluded that Omega's long-term contract with the DOD to provide natural gas distribution to Fort Leonard Wood through the Omega Pipeline System meets the definition of a lease under ASC 842. Omega is the lessor in the contract and the lease is classified as an operating lease. The Company noted the non-lease component is the predominant component in the lease, and the timing and pattern of transfer of the lease component and the associated non-lease component are the same. As discussed in Note 2 ("Significant Accounting Policies"), the Company elected not to separate lease and related non-lease components if the non-lease components otherwise would be accounted for in accordance with the revenue standard under ASC 606; therefore, the Company continues to account for the DOD contract under the revenue standard.
In the second quarter of 2019, the Company started a system improvement project on Omega's pipeline distribution system, which is considered a "built to suit" transaction under ASC 842. The system improvement project is a separate lease component and the DOD is deemed to control the system improvement due to certain contract provisions. As a result, the Company accounted for the costs of the system improvement as a financing arrangement, which is included in accounts and other receivables in the Consolidated Balance Sheets. The margin the Company earned on the system improvement project is a non-lease component accounted for under the revenue standard. Refer to Note 2 ("Significant Accounting Policies") for further details.
LESSEE - LEASED PROPERTIES
The Company's operating subsidiaries currently lease land, corporate office space, single-use office space and equipment. During 2022, Crimson entered into a new corporate office lease that commenced upon possession of the property on April 15, 2023. No lease payments are due for the first year. During September 2023, the Company extended the lease for the CorEnergy corporate office, which will be effective December 2023 through May 2024. During December 2023, the Company extended the lease for the Denver corporate office, which will be effective March 2024 through February 2025. The Company's leases are classified as operating leases and presented as operating right-of-use assets (assets held-for-sale for MoGas and Omega) and operating lease liabilities (liabilities held-for-sale for MoGas and Omega) on the Consolidated Balance Sheets as of December 31, 2023. The Company recognizes lease expense in the Consolidated Statements of Operations on a straight-line basis over the remaining lease term. The Company noted the following information regarding its operating leases for the years ended December 31, 2023 and 2022:
For the Year Ended
December 31, 2023 December 31, 2022
Lease cost:
Operating lease cost $ 1,622,853  $ 1,786,402 
Other Information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows paid on operating leases $ 1,269,790  $ 1,783,822 
Supplemental disclosure of non-cash leasing activities:
Right-of-use assets obtained in exchange for new operating lease liabilities(1)
$ 336,656  $ 66,385 
(1) Includes lease extensions
Variable lease costs were immaterial for the years ended December 31, 2023 and 2022.

The following table reflects the weighted average lease term and discount rate for leases in which the Company is a lessee:
December 31, 2023 December 31, 2022
Weighted-average remaining lease term - operating leases (in years) 9.8 11.0
Weighted-average discount rate - operating leases 8.50  % 7.45  %
The following table reflects the undiscounted cash flows for future minimum lease payments under non-cancellable operating leases reconciled to the Company's lease liabilities on our Consolidated Balance Sheet as of December 31, 2023:
For the Years Ending December 31, Operating Leases
2024 976,299 
2025 1,011,878 
2026 942,903 
2027 952,464 
2028 967,093 
Thereafter 4,737,344 
Total 9,587,981 
Less: Present Value Discount 3,079,496 
Operating Lease Liabilities(1)
 $ 6,508,485 
(1) includes the operating lease liabilities of MoGas of $27,792, which was included in Held-for-Sale as of December 31, 2023. See Note 3 ("Held-For-Sale").
LEASED PROPERTIES AND LEASES LEASED PROPERTIES AND LEASES
Prior to 2021, the Company primarily acquired midstream and downstream assets in the U.S. energy sector such as pipelines, storage terminals, and gas and electric distribution systems, and, historically, leased many of these assets to operators under triple-net leases. The Company's leased property was classified as an operating lease and was recorded as leased property in the Consolidated Balance Sheets. Base rent related to the Company's leased property was recognized on a straight-line basis over the term of the lease when collectability was probable. Participating rent was recognized when it was earned, based on the achievement of specified performance criteria. Base and participating rent were recorded as lease revenue in the Consolidated Statements of Operations. The Company regularly evaluated the collectability of any deferred rent receivable on a lease-by-lease basis. The evaluation primarily included assessment of the financial condition and credit quality of the Company's tenants, changes in tenants' payment history and current economic factors. When the collectability of the deferred rent receivable or future lease payments were no longer probable, the Company recognized a write-off of the deferred rent receivable as a reduction of revenue in the Consolidated Statements of Operations.
The Company divested the last of its material leased assets, including GIGS on February 4, 2021.
LESSOR - LEASED PROPERTIES
Beginning in 2019, the Company concluded that Omega's long-term contract with the DOD to provide natural gas distribution to Fort Leonard Wood through the Omega Pipeline System meets the definition of a lease under ASC 842. Omega is the lessor in the contract and the lease is classified as an operating lease. The Company noted the non-lease component is the predominant component in the lease, and the timing and pattern of transfer of the lease component and the associated non-lease component are the same. As discussed in Note 2 ("Significant Accounting Policies"), the Company elected not to separate lease and related non-lease components if the non-lease components otherwise would be accounted for in accordance with the revenue standard under ASC 606; therefore, the Company continues to account for the DOD contract under the revenue standard.
In the second quarter of 2019, the Company started a system improvement project on Omega's pipeline distribution system, which is considered a "built to suit" transaction under ASC 842. The system improvement project is a separate lease component and the DOD is deemed to control the system improvement due to certain contract provisions. As a result, the Company accounted for the costs of the system improvement as a financing arrangement, which is included in accounts and other receivables in the Consolidated Balance Sheets. The margin the Company earned on the system improvement project is a non-lease component accounted for under the revenue standard. Refer to Note 2 ("Significant Accounting Policies") for further details.
LESSEE - LEASED PROPERTIES
The Company's operating subsidiaries currently lease land, corporate office space, single-use office space and equipment. During 2022, Crimson entered into a new corporate office lease that commenced upon possession of the property on April 15, 2023. No lease payments are due for the first year. During September 2023, the Company extended the lease for the CorEnergy corporate office, which will be effective December 2023 through May 2024. During December 2023, the Company extended the lease for the Denver corporate office, which will be effective March 2024 through February 2025. The Company's leases are classified as operating leases and presented as operating right-of-use assets (assets held-for-sale for MoGas and Omega) and operating lease liabilities (liabilities held-for-sale for MoGas and Omega) on the Consolidated Balance Sheets as of December 31, 2023. The Company recognizes lease expense in the Consolidated Statements of Operations on a straight-line basis over the remaining lease term. The Company noted the following information regarding its operating leases for the years ended December 31, 2023 and 2022:
For the Year Ended
December 31, 2023 December 31, 2022
Lease cost:
Operating lease cost $ 1,622,853  $ 1,786,402 
Other Information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows paid on operating leases $ 1,269,790  $ 1,783,822 
Supplemental disclosure of non-cash leasing activities:
Right-of-use assets obtained in exchange for new operating lease liabilities(1)
$ 336,656  $ 66,385 
(1) Includes lease extensions
Variable lease costs were immaterial for the years ended December 31, 2023 and 2022.

The following table reflects the weighted average lease term and discount rate for leases in which the Company is a lessee:
December 31, 2023 December 31, 2022
Weighted-average remaining lease term - operating leases (in years) 9.8 11.0
Weighted-average discount rate - operating leases 8.50  % 7.45  %
The following table reflects the undiscounted cash flows for future minimum lease payments under non-cancellable operating leases reconciled to the Company's lease liabilities on our Consolidated Balance Sheet as of December 31, 2023:
For the Years Ending December 31, Operating Leases
2024 976,299 
2025 1,011,878 
2026 942,903 
2027 952,464 
2028 967,093 
Thereafter 4,737,344 
Total 9,587,981 
Less: Present Value Discount 3,079,496 
Operating Lease Liabilities(1)
 $ 6,508,485 
(1) includes the operating lease liabilities of MoGas of $27,792, which was included in Held-for-Sale as of December 31, 2023. See Note 3 ("Held-For-Sale").