Note 5 - Derivative Financial Instruments

9 Months Ended

Sep. 30, 2021

Notes to Financial Statements

Derivative Instruments and Hedging Activities Disclosure [Text Block]

NOTE 5. Derivative Financial Instruments

The Company primarily utilizes commodity swap contracts to (i) reduce the effect of price volatility on the commodities the Company produces and sells, and (ii) support the Company’s capital budgeting and expenditure plans and (iii) support the payment of contractual obligations.

The following table summarizes the effect of derivatives on the Company’s condensed consolidated statements of operations:

				Three Months Ended September 30, 2020							Nine Months Ended September 30, 2020
	Three Months Ended September 30, 2021			August 22, 2020 through September 30, 2020		July 1, 2020 through August 21, 2020		Nine Months Ended September 30, 2021			August 22, 2020 through September 30, 2020		January 1, 2020 through August 21, 2020
	Successor			Successor		Predecessor		Successor			Successor		Predecessor
Noncash derivative gain (loss), net	$	(6,844	)	$	—	$	—	$	(19,402	)	$	—	$	—
Cash payments on settled derivatives, net		(3,976	)		—		—		(5,014	)		—		—
Derivative gain (loss), net	$	(10,820	)	$	—	$	—	$	(24,416	)	$	—	$	—

Crude oil production derivatives. The Company sells its crude oil production at the lease and the sales contracts governing such crude oil production are tied directly to, or are correlated with, NYMEX WTI crude oil prices. As such, the Company uses NYMEX WTI derivative contracts to manage future crude oil price volatility.

The Company’s outstanding crude oil derivative contracts as of September 30, 2021 and the weighted average crude oil prices per barrel for those contracts are as follows:

	2021		2022										2023
	Fourth Quarter		First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total		First Quarter		Second Quarter		Total
Crude Oil Price Swaps - WTI: (a)
Volume (MBbls)		460.0		450.0		302.5		66.0		202.4		1,020.9		198.0		200.2		398.2
Price per Bbl	$	61.91	$	61.91	$	62.16	$	57.22	$	57.22	$	60.75	$	57.22	$	57.22	$	57.22

The Company uses credit and other financial criteria to evaluate the credit standings of, and to select, counterparties to its derivative financial instruments. Although the Company does not obtain collateral or otherwise secure the fair value of its derivative financial instruments, associated credit risk is mitigated by the Company’s credit risk policies and procedures.

Net derivative liabilities associated with the Company’s open commodity derivatives are all with Fifth Third Bank, National Association (“Fifth Third”) as of September 30, 2021.