Lease Options

DPC leases equipment under the following options:

• JT units are leased for twelve, twenty-four or forty-eight month terms. 
• Refrigeration units are leased for 24 and 48 month terms.
• The forty-eight month term lease will give the Lessee the advantage of lower lease fees and it qualifies to be a "capital lease".  By capitalizing the lease, the lease expenses can be removed from any "lifting cost" calculations.
• Lease rates for terms longer than 48 months are quoted upon request.

Leases convert to a month to month basis at the end of the primary term.  Cancellation during the evergreen period requires a thirty day notice.  Lessee has the option at any time during a lease to change the equipment for other size units in inventory.  Lessee is responsible for any change-out expenses.  Monthly rental rates will be adjusted accordingly.  In a situation when the gas production becomes uneconomical to produce, the lessee may return the equipment and cancel the remainder of the lease.

Qualifications of a Capital Lease

Statements of Financial Accounting Standards No. 13 specifies the accounting principals for leases.  A capital lease is defined as a lease that meets the following criteria:

The present value of the minimum lease payments equals or exceeds 90 percent of the fair value of the leased asset less any investment tax credit retained by the Lessor.  This criteria is not applicable when the beginning of the lease term falls within the last 25 percent of the total economic life of the leased asset.

DPC uses new or almost new equipment for capital lease applications to insure eligibility with this requirement.  The forty-eight month lease term insures that the present value when calculated with at 10% discount rate exceeds the 90 percent of fair value requirement.  The purchase price of the new equipment is used as the fair value in this calculation.

Please verify with your own auditors that the capital lease considerations are met prior to proceeding.