XML 38 R19.htm IDEA: XBRL DOCUMENT v3.25.0.1
DERIVATIVE INSTRUMENTS AND PRICE RISK MANAGEMENT
 12 Months Ended
Dec. 31, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVE INSTRUMENTS AND PRICE RISK MANAGEMENT DERIVATIVE INSTRUMENTS AND PRICE RISK MANAGEMENT
The Company utilizes various commodity price derivative instruments to (i) reduce the effects of volatility in price changes on the crude oil and natural gas commodities it produces and sells, (ii) reduce commodity price risk and (iii) provide a base level of cash flow in order to assure it can execute at least a portion of its capital spending. In addition, from time to time the Company utilizes interest rate swaps to mitigate exposure to changes in interest rates on the Company’s variable-rate indebtedness.

All derivative instruments are recorded in the Company’s balance sheets as either assets or liabilities measured at their fair value (see Note 11).  The Company has not designated any derivative instruments as hedges for accounting purposes and does not enter into such instruments for speculative trading purposes.  If a derivative does not qualify as a hedge or is not designated as a hedge, the changes in the fair value are recognized in the Company’s statements of operations as a gain or loss on derivative instruments.  Mark-to-market gains and losses represent changes in fair values of derivative instruments that have not been settled.  The Company’s cash flow is only impacted when the actual settlements under the derivative contracts result in making or receiving a payment to or from the counterparty.  These cash settlements represent the cumulative gains and losses on the Company’s derivative instruments for the periods presented and do not include a recovery of costs that were paid to acquire or modify the derivative instruments that were settled.

The Company has master netting agreements on individual derivative instruments with certain counterparties and therefore the current asset and liability are netted in the balance sheet and the non-current asset and liability are netted in the balance sheet for contracts with these counterparties.

Commodity Derivative Instruments

The following table presents settlements on commodity derivative instruments and unsettled gains and losses on open commodity derivative instruments for the periods presented which is recorded in the revenue section of our statements of operations:

 Year ended December 31,
(In thousands)202420232022
Cash Received (Paid) on Settled Derivatives $83,225 $57,919 $(455,450)
Non-Cash Mark-to-Market Gain (Loss) on Derivatives (21,258)201,331 40,187 
Gain (Loss) on Commodity Derivatives, Net$61,967 $259,250 $(415,262)
The following table summarizes open commodity derivative positions as of December 31, 2024, for commodity derivatives that were entered into through December 31, 2024, for the settlement period presented:


2025202620272028
Oil:
NYMEX WTI - Swaps:
Volume (Bbl)10,503,662 1,069,557 — — 
Weighted Average Price ($/Bbl)$73.88 $70.27 $— $— 
WTI NYMEX - Swaptions(1):
Volume (Bbl)10,506,950 4,883,550 — 640,500 
Weighted Average Price ($/Bbl)$73.45 $70.91 $— $70.00 
ARGUS WTI MIDLAND CMA DIFF - Swaps:
Volume (Bbl)10,951,776 4,358,291 — — 
Weighted Average Price ($/Bbl)$0.96 $1.05 $— $— 
WTI NYMEX - Call Options(1):
Volume (Bbl)4,346,420 4,526,365 3,102,500 366,000 
Weighted Average Price ($/Bbl)$80.36 $70.65 $82.94 $80.00 
Brent ICE - Call Options(1):
Volume (Bbl)— — — 316,590 
Weighted Average Price ($/Bbl)$— $— $— $80.00 
NYMEX WTI - Collars:
Collar Put Volume (Bbl)7,518,539 3,626,842 — — 
Collar Call Volume (Bbl)9,389,462 5,376,557 — — 
Weighted Average Floor Price ($/Bbl)$69.35 $66.15 $— $— 
Weighted Average Ceiling Price ($/Bbl)$77.67 $74.41 $— $— 
Natural Gas:
NYMEX Henry Hub - Swaps:
Volume (MMBtu)16,480,000 7,585,000 155,000 — 
Weighted Average Price ($/MMBtu)$3.51 $3.77 $3.20 $— 
Henry Hub NYMEX - Swaptions(1):
Volume (MMBtu)27,970,000 10,035,000 23,790,000 — 
Weighted Average Price ($/MMBtu)$4.06 $4.15 $3.98 $— 
WAHA Basis - Swap:
Volume (MMBtu)22,218,000 18,250,000 3,650,000 — 
Weighted Average Price ($/MMBtu)$(0.89)$(0.84)$(0.78)$— 
WAHA Index - Swap:
Volume (MMBtu)22,125,000 18,560,000 4,890,000 — 
Weighted Average Price ($/MMBtu)$— $— $0.01 $— 
TETCO M2 Basis - Swap:
Volume (MMBtu)19,145,000 2,755,000 — — 
Weighted Average Price ($/MMBtu)$(0.92)$(0.93)$— $— 
TCO Basis - Swap:
Volume (MMBtu)1,825,000 — — — 
Weighted Average Price ($/MMBtu)$(0.87)$— $— $— 
Henry Hub NYMEX - Call Options(1):
Volume (MMBtu)12,207,700 3,239,500 35,523,000 6,700,000 
Weighted Average Price ($/MMBtu)$3.73 $6.00 $5.97 $4.50 
NYMEX Henry Hub - Collars:
Collar Put Volume (MMBtu)37,334,006 22,182,303 3,340,000 — 
Collar Call Volume (MMBtu)37,334,006 22,182,303 3,340,000 — 
Weighted Average Floor Price ($/MMBtu)$3.11 $3.09 $3.00 $— 
Weighted Average Ceiling Price ($/MMBtu)$4.82 $5.04 $3.83 $— 
NGL:
OPIS - Swaps:
Volume (Bbl)101,150 376,275 234,800 — 
Weighted-Average Price ($/Bbl)$36.65 $33.90 $31.19 $— 
______________

(1)Swaptions are crude oil and natural gas derivative contracts that give counterparties the option to extend certain derivative contracts for additional periods. Call Options are crude oil and natural gas derivative contracts sold by the Company that give counterparties the option to exercise certain derivative contracts. The volumes and prices reflected as Swaptions and Call Options in this table will only be effective if the options are exercised by the applicable counterparties.

Interest Rate Derivative Instruments

At times, the Company uses interest rate swaps to effectively convert a portion of its variable rate indebtedness to fixed rate indebtedness. The settlement of derivative instruments is recognized as a component of interest expense in the statements of operations. The mark-to-market component of these derivative instruments is recognized in gain (loss) on unsettled interest rate derivatives, net in the statements of operations. The following table summarizes our open interest rate derivative contracts as of December 31, 2024.

Fixed Rate Swap Agreements
Swaps
Contract PeriodNotional AmountFixed RateFloating Benchmark
October 1, 2024 - October 1, 2026$25,000,000 3.423 %USD-SOFR CME

Other Information Regarding Derivative Instruments

The following table sets forth the amounts, on a gross basis, and classification of the Company’s outstanding derivative financial instruments at December 31, 2024 and 2023, respectively.  Certain amounts may be presented on a net basis in the financial statements when such amounts are with the same counterparty and subject to a master netting arrangement:
(In thousands)December 31,
Estimated Fair Value
Type of CommodityBalance Sheet Location20242023
Derivative Assets:
Commodity Price Swap ContractsCurrent Assets$49,031 $61,323 
Commodity Basis Swap ContractsCurrent Assets21,419 4,487 
Commodity Price Swaptions ContractsCurrent Assets5,398 — 
Commodity Price Collar ContractsCurrent Assets46,839 36,619 
Commodity Price Call Option ContractsCurrent Assets2,289 17,964 
Commodity Price Put Option ContractsCurrent Assets— 664 
Interest Rate Swap ContractsCurrent Assets160 — 
Commodity Price Swap ContractsNoncurrent Assets8,710 16,621 
Commodity Basis Swap ContractsNoncurrent Assets16,513 1,874 
Commodity Price Collar ContractsNoncurrent Assets35,652 26,841 
Commodity Price Call Option ContractsNoncurrent Assets— 3,635 
Interest Rate Swap ContractsNoncurrent Assets103 — 
Total Derivative Assets$186,114 $170,029 
Derivative Liabilities:
Commodity Price Swap ContractsCurrent Liabilities$(3,667)$(8,079)
Commodity Basis Swap ContractsCurrent Liabilities(5,150)(6,796)
Commodity Price Swaptions ContractsCurrent Liabilities(44,174)(1,496)
Commodity Price Collar ContractsCurrent Liabilities(29,668)(14,370)
Commodity Price Call Option ContractsCurrent Liabilities(15,867)(31,380)
Commodity Price Swap ContractsNoncurrent Liabilities(3,852)(2,288)
Commodity Basis Swap ContractsNoncurrent Liabilities(2,564)(8,922)
Commodity Price Swaptions ContractsNoncurrent Liabilities(44,315)(35,896)
Commodity Price Collar ContractsNoncurrent Liabilities(36,327)(18,849)
Commodity Price Call Option ContractsNoncurrent Liabilities(57,693)(78,123)
Total Derivative Liabilities$(243,278)$(206,198)

The use of derivative transactions involves the risk that the counterparties will be unable to meet the financial terms of such transactions.  When the Company has netting arrangements with its counterparties that provide for offsetting payables against receivables from separate derivative instruments these assets and liabilities are netted in the balance sheet. The tables presented below provide reconciliation between the gross assets and liabilities and the amounts reflected in the balance sheets. The amounts presented exclude derivative settlement receivables and payables as of the balance sheet dates.
 Estimated Fair Value at December 31, 2024
(In thousands)Gross Amounts of Recognized Assets (Liabilities)Gross Amounts Offset on the
Balance Sheet		Net Amounts of Assets (Liabilities) Presented on the Balance Sheet
Offsetting of Derivative Assets:
Current Assets$125,137 $(78,612)$46,525 
Non-Current Assets60,977 (51,145)9,832 
Total Derivative Assets$186,114 $(129,757)$56,357 
Offsetting of Derivative Liabilities: 
Current Liabilities$(98,527)$78,612 $(19,915)
Non-Current Liabilities(144,751)51,145 (93,606)
Total Derivative Liabilities$(243,278)$129,757 $(113,521)

 Estimated Fair Value at December 31, 2023
(In thousands)Gross Amounts of Recognized Assets (Liabilities)Gross Amounts Offset on the
Balance Sheet		Net Amounts of Assets (Liabilities) Presented on the Balance Sheet
Offsetting of Derivative Assets:
Current Assets$121,057 $(45,324)$75,733 
Non-Current Assets48,971 (38,246)10,725 
Total Derivative Assets$170,029 $(83,570)$86,459 
Offsetting of Derivative Liabilities: 
Current Liabilities$(62,120)$45,324 $(16,797)
Non-Current Liabilities(144,077)38,246 (105,831)
Total Derivative Liabilities$(206,198)$83,570 $(122,628)

All of the Company’s outstanding derivative instruments are covered by International Swap Dealers Association Master Agreements (“ISDAs”) entered into with parties that are also lenders under the Company’s Revolving Credit Facility.  The Company’s obligations under the derivative instruments are secured pursuant to the Revolving Credit Facility, and no additional collateral had been posted by the Company as of December 31, 2024.  The ISDAs may provide that as a result of certain circumstances, such as cross-defaults, a counterparty may require all outstanding derivative instruments under an ISDA to be settled immediately.  See Note 11 for the aggregate fair value of all derivative instruments that were in a net liability position at December 31, 2024 and 2023.