Derivative Activities

12 Months Ended

Dec. 31, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Activities

(8) Derivative Activities

We use commodity-based derivative contracts to manage exposure to commodity price fluctuations. We do not enter into these arrangements for speculative or trading purposes. We do not utilize complex derivatives as we typically utilize commodity swaps or collar contracts to (1) reduce the effect of price volatility of the commodities we produce and sell and (2) support our annual capital budget and expenditure plans. Every derivative instrument is required to be recorded on our consolidated balance sheets as either an asset or a liability measured at its fair value. Their fair value, which is represented by the estimated amount that would be realized upon termination, based on a comparison of the contract price and a reference price (generally NYMEX for natural gas and crude oil), approximated a net derivative asset of $424.4 million at December 31, 2023. These contracts expire monthly through December 2026. The following table sets forth the derivative volumes by year as of December 31, 2023, excluding our basis swaps which are discussed separately below:

Period	Contract Type	Volume Hedged	Weighted Average Hedge Price
			Swap		Sold Put		Floor		Ceiling
Natural Gas (a)
2024	Swaps	304,973 Mmbtu/day	$	4.01
2024	Collars	436,694 Mmbtu/day					$	3.50	$	5.63
2024	Three-way Collars	93,511 Mmbtu/day			$	2.50	$	3.40	$	4.15
2025	Swaps	400,000 Mmbtu/day	$	4.12
2025	Three-way Collars	30,000 Mmbtu/day			$	2.70	$	4.00	$	5.00
2026	Swaps	60,000 Mmbtu/day	$	4.15
Crude Oil
January-September 2024	Swaps	4,000 bbls/day	$	80.25
January-September 2024	Collars	832 bbls/day					$	80.00	$	90.12

(a) We also sold natural gas swaptions of 40,000 Mmbtu/day for calendar year 2026 at a weighted average price of $4.11/Mmbtu that expire June 2024.

Basis Swap Contracts

In addition to the commodity derivatives described above, at December 31, 2023, we had natural gas basis swap contracts which lock in the differential between NYMEX and certain of our physical pricing points in Appalachia. These contracts settle monthly through December 2026 and include a total volume of 313,453,000 Mmbtu. The fair value of these contracts was a net derivative asset of $18.3 million on December 31, 2023.

Derivative Assets and Liabilities

The combined fair value of derivatives included in the accompanying consolidated balance sheets as of December 31, 2023 and 2022 is summarized below (in thousands). As of December 31, 2023, we are conducting derivative activities with fourteen counterparties, of which all but six are secured lenders in our bank credit facility. We believe all of these counterparties are acceptable credit risks. At times, such risks may be concentrated with certain counterparties. The credit worthiness of our counterparties is subject to periodic review. The assets and liabilities are netted where derivatives with both gain and loss positions are held by a single counterparty and we have master netting arrangements.

		December 31, 2023
		Gross Amounts of Recognized Assets		Gross Amounts Offset in the Balance Sheet			Net Amounts of Assets Presented in the Balance Sheet
Derivative assets:
Natural gas	–swaps	$	238,465	$	—		$	238,465
	–swaptions		—		(1,161	)		(1,161	)
	–collars		150,456		—			150,456
	–three-way collars		25,406		—			25,406
	–basis swaps		26,852		(8,246	)		18,606
Crude oil	–swaps		9,115		—			9,115
	–collars		2,084		—			2,084
		$	452,378	$	(9,407	)	$	442,971

		December 31, 2023
		Gross Amounts of Recognized (Liabilities)			Gross Amounts Offset in the Balance Sheet		Net Amounts of (Liabilities) Presented in the Balance Sheet
Derivative (liabilities):
Natural gas	–swaptions	$	(1,161	)	$	1,161	$	—
	–basis swaps		(8,575	)		8,246		(329	)
		$	(9,736	)	$	9,407	$	(329	)

		December 31, 2022
		Gross Amounts of Recognized Assets		Gross Amounts Offset in the Balance Sheet			Net Amounts of Assets Presented in the Balance Sheet
Derivative assets:
Natural gas	–swaps	$	19,438	$	(6,236	)	$	13,202
	–collars		54,222		(45,452	)		8,770
	–three-way collars		12,424		(12,424	)		—
	–basis swaps		25,493		(20,437	)		5,056
Crude oil	–collars		1,807		—			1,807
Divestiture contingent consideration			13,080		—			13,080
		$	126,464	$	(84,549	)	$	41,915

		December 31, 2022
		Gross Amounts of Recognized (Liabilities)			Gross Amounts Offset in the Balance Sheet		Net Amounts of (Liabilities) Presented in the Balance Sheet
Derivative (liabilities):
Natural gas	–swaps	$	(115,374	)	$	6,236	$	(109,138	)
	–collars		(72,866	)		45,452		(27,414	)
	–three-way collars		(24,341	)		12,424		(11,917	)
	–basis swaps		(24,972	)		20,437		(4,535	)
Crude oil	–swaps		(13,908	)		—		(13,908	)
		$	(251,461	)	$	84,549	$	(166,912	)

The effects of our derivatives on our consolidated statements of income for the last three years are summarized below (in thousands).

	Year Ended December 31,
Derivative Fair Value Income (Loss)	2023			2022			2021
Commodity swaps	$	434,836		$	(713,122	)	$	(466,203	)
Swaptions		(1,161	)		11,149			(1,346	)
Collars		260,630			(302,364	)		(117,612	)
Three-way collars		88,096			(235,335	)		(137,443	)
Basis swaps		43,833			41,622			33,691
Calls		—			(1,363	)		(836	)
Freight swaps		—			(33	)		(647	)
Divestiture contingent consideration		(5,080	)		10,940			40,180
Total	$	821,154		$	(1,188,506	)	$	(650,216	)