Derivative Instruments

12 Months Ended

Dec. 31, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

Note 5 – Derivative Instruments

The Company utilizes commodity derivative instruments to reduce its exposure to crude oil and natural gas price volatility for a portion of its estimated production from its proved, developed, producing oil and natural gas properties. Currently, the Company only has commodity swap contracts outstanding, which guarantee a fixed price on contracted volumes over specified time periods. However, in the future, the Company could utilize other types of derivative instruments including call and purchased options, put spreads, collars, and three-way collars. As of December 31, 2024, the Company’s derivative counterparty is Citi, which is the administrative agent and lender of its reserve-based credit agreement (the “Credit Facility”).

As of December 31, 2024, the Company had the following outstanding crude oil and natural gas derivative contracts in place, which settle monthly and are indexed to NYMEX West Texas Intermediate and NYMEX Henry Hub, respectively:

	Settling January 1, 2025 through December 31, 2025		Settling January 1, 2026 through December 31, 2026		Settling January 1, 2027 through December 31, 2027		Settling January 1, 2028 through December 31, 2028
Crude Oil Swaps:
Notional volume (Bbls)		938,040		496,884		223,599		169,839
Weighted average price ($/Bbl)	$	67.30	$	64.40	$	62.70	$	61.81
Natural Gas Swaps:
Notional volume (MMBtus)		1,309,098		885,147		626,832		457,368
Weighted average price ($/MMBtu)	$	3.33	$	3.73	$	3.69	$	3.49

The Company recognizes all of its derivative instruments at fair value as assets or liabilities on the accompanying consolidated balance sheets. The Company has not designated any of its derivative instruments as hedges for accounting purposes; therefore, the aggregate net gains and losses resulting from changes in the fair values of its outstanding derivatives and the settlement of derivative instruments during the period are recognized as part of the loss on derivatives, net on the accompanying consolidated statements of operations. Additionally, all of the Company’s hedge positions are currently in a liability position, therefore, there is no offsetting in the presentation of its derivative instruments.

The following table presents the net fair values of the Company’s derivative instruments, recorded on the consolidated balance sheet for the period presented:

	December 31, 2024
	(In thousands)
Current liabilities	$	2,446
Long-term liabilities		1,949
Total derivatives liabilities	$	4,395

The following table presents the components of loss on derivatives, net reflected on the accompanying consolidated statement of operations and cash flows for the period presented:

	Year Ended
	December 31, 2024
	(In thousands)
Change in fair value of derivatives, net
Crude oil	$	3,763
Natural gas		632
Total		4,395
Loss on derivatives, net	$	4,395

The Company did not have any outstanding derivatives contracts or any derivative settlements during the year ended December 31, 2023.