Fair Value Measurements

3 Months Ended

Mar. 31, 2025

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 4 - 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 do not include optionality and therefore generally have no unobservable inputs, they are classified as Level 2. The Company factors its own non-performance risk into the valuation of derivatives using current published credit default swap rates. As of March 31, 2025 and December 31, 2024, the impact of the non-performance risk adjustment to the Company's fair value of commodity derivative liabilities was $8.9 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:

	March 31, 2025
	Fair Value Measurements Using:
(in thousands)	Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Financial assets
Derivative instruments	$	6,761	$	—	$	6,761
Financial liabilities
Derivative instruments	192,174		—		192,174

	December 31, 2024
	Fair Value Measurements Using:
(in thousands)	Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Financial liabilities
Derivative instruments	$	67,634	$	—	$	67,634

The contingent consideration was generated from the Devon Barnett Acquisition. As of December 31, 2024, the contingent consideration was included in current liabilities in the condensed consolidated balance sheets as a payable as the final payout of $20.0 million was made on January 8, 2025. The Devon Barnett Acquisition and the Exxon Barnett Acquisition contingencies are described further in Note 10 - 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 5 - Derivative Instruments for further discussion.

The minority ownership puttable shares from the 2021 Plan (as defined in Note 8 - Stockholders' 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 8 - Stockholders' 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, which is valued consistent with valuation methodologies described for the minority ownership puttable shares. Equity-based compensation is further described in Note 8 - Stockholders' Equity.

The table below sets forth the changes in the Company's Level 3 fair value measurements:

	Three Months Ended March 31, 2024
(in thousands)	Contingent Consideration		Minority Ownership		Equity-Based Compensation		Total
Balance, beginning of period	$	29,676	$	59,988	$	126,966	$	216,630
Grant date fair value of equity-based compensation, pre-IPO	—		—		1,073		1,073
Change in fair market value (all instruments)	(6,594)		1,548		495		(4,551)
Balance, end of period	$	23,082	$	61,536	$	128,534	$	213,152