Fair Value Measurements

12 Months Ended

Dec. 31, 2025

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 6 - Fair Value Measurements

As the Company uses the market approach to determine the fair value of its derivative instruments, these fair values are also compared to the values given by counterparties for reasonableness. Since natural gas and NGL swaps, fixed-price power sales, and fixed price power purchases are based on measurements derived indirectly from observable inputs or from quoted prices from markets that are less liquid, they are classified as Level 2 within the fair value hierarchy. The heat rate call options are classified as Level 3 within the fair value hierarchy because their valuation relies on significant unobservable inputs. These inputs include correlation between the underlying power and natural gas commodities and volatility assumptions for non-liquid delivery periods, which require management judgment and are not directly observable in the market.

The Company factors its own non-performance risk into the valuation of derivatives using current published credit default swap rates. As of December 31, 2025 and 2024, the impact of the non-performance risk adjustment to the Company’s fair value of commodity derivative liabilities was $1.6 million and $6.6 million, respectively.

The following tables set forth by level within the fair value hierarchy, the financial assets and liabilities that were accounted for at fair value on a recurring basis:

	December 31, 2025
	Fair Value Measurements Using:
	Significant Other
	Observable			Significant
	Inputs			Unobservable
(in thousands)	(Level 2)		Inputs (Level 3)		Total
Financial assets
Derivative instruments
Natural gas derivatives	$	57,135	$	—	$	57,135
NGL derivatives		13,807		—		13,807
Natural gas basis swaps		17,272		—		17,272
Power derivatives		1,347		771		2,118
Financial liabilities
Derivative instruments
Natural gas derivatives		6,572		—		6,572
NGL derivatives		407		—		407
Natural gas basis swaps		1,328		—		1,328
Power derivatives		3,514		2,415		5,929

	December 31, 2024
	Fair Value Measurements Using:
	Significant Other
	Observable			Significant
	Inputs			Unobservable
(in thousands)	(Level 2)		Inputs (Level 3)		Total
Financial assets
Derivative instruments
Natural gas derivatives	$	6,094	$	—	$	6,094
Power derivatives		2,790		—		2,790
Financial liabilities
Derivative instruments
Natural gas derivatives		54,083		—		54,083
NGL derivatives		8,973		—		8,973
Natural gas basis swaps		5,380		—		5,380
Power derivatives		15,648		3,595		19,243

The contingent consideration was generated from the Devon Barnett Acquisition and on January 8, 2025, the Company paid the final 2024 contingent consideration of $20.0 million, which is reflected as contingent consideration payable within current liabilities on the consolidated balance sheets as of December 31, 2024. The Devon Barnett Acquisition and the Exxon Barnett Acquisition contingencies are described further in Note 16 - Commitments and Contingencies. The Devon Barnett Acquisition was accounted for as an asset acquisition with the contingent consideration meeting the criteria of a derivative in accordance with ASC 815 - Derivatives and Hedging. See Note 7 - Derivative Instruments for further discussion.

The minority ownership puttable shares from the 2021 Plan (as defined in Note 13 - Stockholders’ Equity and Mezzanine Equity) were recorded at fair value upon initial recognition in mezzanine equity, and its common stock was valued using both observable (Level 2) and unobservable (Level 3) inputs. Subsequent to the Company’s IPO, the minority ownership puttable shares were converted to common stock. The minority ownership puttable shares are further described in Note 13 - Stockholders’ Equity and Mezzanine Equity.

Equity-based compensation from the 2021 Plan was recorded at fair market value on the grant date. The underlying market condition was valued using the application of Monte Carlo simulations using both observable (Level 2) and unobservable (Level 3) inputs. Prior to the Company’s IPO, the remaining components of the awards were valued based on the fair market value of the common stock of the Company, determined using the same valuation methodologies applied to the minority ownership puttable shares. Equity-based compensation is further described in Note 13 - Stockholders’ Equity and Mezzanine Equity.

The tables below set forth the changes in the Company’s Level 3 fair value measurements (in thousands):

	Year Ended
Derivatives	December 31, 2025
Balance, beginning of period	$	(3,595)
Derivative settlements		(62,258)
Derivative realized gains (losses)		62,258
Derivative unrealized gains (losses)		1,951
Balance, end of period	$	(1,644)

	Year Ended December 31, 2024
	Contingent		Minority		Equity-Based
	Consideration		Ownership		Compensation		Derivatives		Total
Balance, beginning of period	$	29,676	$	59,988	$	126,966	$	(42,091)	$	174,539
Contingent consideration - settled		(20,000)		—		—		—		(20,000)
Mezzanine equity conversion		—		(42,995)		(74,993)		—		(117,988)
Grant date fair value of equity-based compensation, pre-IPO		—		(4)		(42,663)		—		(42,667)
Derivative settlements		—		—		—		(88,637)		(88,637)
Derivative realized gains (losses)		—		—		—		88,637		88,637
Change in fair market value (all instruments)		(9,676)		(16,989)		(9,310)		38,496		2,521
Balance, end of period	$	—	$	—	$	—	$	(3,595)	$	(3,595)

	Year Ended December 31, 2023
	Contingent		Minority		Equity-Based
	Consideration		Ownership		Compensation		Derivatives		Total
Balance, beginning of period	$	88,051	$	62,712	$	89,171	$	(1,994)	$	237,940
Contingent consideration - settled		(20,000)		—		—		—		(20,000)
Grant date fair value of equity-based compensation, pre-IPO		—		(2)		22,193		—		22,191
Derivative settlements		—		—		—		(55,258)		(55,258)
Derivative realized gains (losses)		—		—		—		55,258		55,258
Change in fair market value (all instruments)		(38,375)		(2,722)		15,602		(40,097)		(65,592)
Balance, end of period	$	29,676	$	59,988	$	126,966	$	(42,091)	$	174,539

The following table is the quantitative information regarding significant unobservable inputs used in the measurement of Level 3 positions:

	December 31, 2025
	Significant
	Unobservable					Weighted
Valuation Technique	Input	Range				Average		Description
Kirk Spread Option Model	Power and natural gas price correlation	92.7	%			92.7	%	Estimated correlation between underlying commodities
Kirk Spread Option Model	Power volatility (non-liquid hours)	42.9	%	52.4	%	47.7	%	Extrapolated from observable 5x16 implied volatilities and shaped for delivery periods (2x16 and 7x8)

	December 31, 2024
	Significant
	Unobservable					Weighted
Valuation Technique	Input	Range				Average		Description
Kirk Spread Option Model	Power and natural gas price correlation	70.4	%			70.4	%	Estimated correlation between underlying commodities
Kirk Spread Option Model	Power volatility (non-liquid hours)	56.8	%	69.4	%	63.1	%	Extrapolated from observable 5x16 implied volatilities and shaped for delivery periods (2x16 and 7x8)

Other Fair Value Measurements

The carrying value of cash and cash equivalents, restricted cash, accounts receivable, net, and accounts payable and accrued liabilities approximate their fair values due to the short-term maturities of these instruments. Long-term debt obligations under the RBL Credit Agreement, the Temple I Loan Agreements, and the Temple Credit Facilities also approximate fair value because the variable rates of interest are market-based. The fair value of the 2030 Senior Notes as of December 31, 2025, was approximately $507.5 million based on quoted market prices from banks and are classified Level 2 in the fair value hierarchy. The 2030 Senior Notes are carried on the consolidated balance sheets at their original issuance value, as adjusted over time to accrete that value to par.