GENESIS ENERGY LP

5. Lease Accounting

Lessee Arrangements

We lease a variety of transportation equipment (primarily railcars), terminals, land and facilities, and office space and equipment. Lease terms vary and can range from short-term (not greater than 12 months) to long-term (greater than 12 months). A majority of our leases contain options to extend the life of the lease at our sole discretion. We considered these options when determining the lease terms used to derive our right of use asset and associated lease liability. Leases with a term of 12 months or less are not recorded on our Consolidated Balance Sheets and we recognize lease expense for these leases on a straight-line basis over the lease term.

Certain lease agreements include lease and non-lease components. We have elected to combine lease and non-lease components for all of our underlying assets for the purpose of deriving our right of use asset and lease liability. Additionally, certain lease payments are driven by variable factors, such as plant production or indexing rates. Variable costs are expensed as incurred and are not included in our determination of our lease liability and right of use asset.

As a lessee, we do not have any finance leases and none of our leases contain material residual value guarantees or material restrictive covenants. In addition, most of our leases do not provide an implicit rate, and as such, we determined our incremental borrowing rate based on the information available at the inception of the lease in determining the present value of lease payments.

Our lease portfolio consists of operating leases within three major categories: Transportation Equipment, Office Space and Equipment, and Facilities and Equipment. These values are recorded within “Right of use assets, net” on the Consolidated Balance Sheets. Current and non-current lease liabilities are recorded within “Accrued liabilities” and “Other long-term liabilities”, respectively, on the Consolidated Balance Sheets. Refer to the table below for our lease balances as of December 31, 2025 and December 31, 2024.

Our “Right of use assets, net” balance includes our unamortized initial direct costs associated with certain of our transportation equipment and facilities and equipment leases. Additionally, it includes our unamortized prepaid rents, our deferred rents, and our previously classified intangible asset associated with a favorable lease.

We recorded total operating lease expense of $16.7 million, $15.4 million, and $15.5 million for the years ended December 31, 2025, 2024, and 2023, respectively. The total operating lease expense includes the amounts associated with our existing lease liabilities, along with both short-term lease costs and variable lease costs incurred during the period which are not significant to the operating lease expense individually, or in the aggregate.

The following table presents the maturities of our operating lease liabilities as of December 31, 2025 on an undiscounted cash flow basis reconciled to the present value recorded on our Consolidated Balance Sheet:

The following table presents the weighted average remaining terms and discount rates related to our right of use assets:

The following table provides information regarding the cash paid and right of use assets obtained related to our operating leases:

Lessor Arrangements

We have certain contracts discussed below in which we act as a lessor.

Operating Leases

During the years ended December 31, 2025, 2024, and 2023, we acted as a lessor in our revenue contracts associated with our 330,00 barrel-capacity ocean going tanker, the M/T American Phoenix, included in our marine transportation segment. Ourlease revenues for this arrangement were $29.2 million, $28.2 million and $23.6 million for the years ended December 31, 2025, 2024 and 2023, respectively.

The M/T American Phoenix is under contract through mid-2027. For 2026, and through the expiration of the contract in 2027, we expect to receive undiscounted cash flows from fixed lease payments of $30.6 million and $15.2 million respectively. Our agreements generally contain clauses that may limit the use of the asset or require certain actions be taken by the lessee to maintain the asset for future performance.