Derivatives and Risk Management (Tables)

6 Months Ended

Jun. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments Notional Amount, Weighted Average Contract Prices and Fair Value

The following tables provide information about the Company’s financial instruments that are sensitive to changes in commodity prices and that are used to protect the Company’s exposure. None of the financial instruments below are designated for hedge accounting treatment. The tables present the notional amount, the weighted average contract prices and the fair value by expected maturity dates as of June 30, 2022:

Financial Protection on Production
		Weighted Average Price per MMBtu
	Volume (Bcf)	Swaps		Sold Puts		Purchased Puts		Sold Calls		Basis Differential		Fair Value at June 30, 2022 (in millions)
Natural Gas
2022
Fixed price swaps	417	$	3.04	$	—	$	—	$	—	$	—	$	(1,090)
Two-way costless collars	47	—		—		2.52		2.91		—		(132)
Three-way costless collars	184	—		2.03		2.48		2.88		—		(512)
Total	648											$	(1,734)
2023
Fixed price swaps	504	$	3.08	$	—	$	—	$	—	$	—	$	(788)
Two-way costless collars	219	—		—		3.03		3.55		—		(269)
Three-way costless collars	215	—		2.09		2.54		3.00		—		(393)
Total	938											$	(1,450)
2024
Fixed price swaps	224	$	2.96	$	—	$	—	$	—	$	—	$	(304)
Two-way costless collars	44	—		—		3.07		3.53		—		(42)
Three-way costless collars	11	—		2.25		2.80		3.54		—		(16)
Total	279											$	(362)
Basis Swaps
2022	182	$	—	$	—	$	—	$	—	$	(0.53)	$	50
2023	281	—		—		—		—		(0.50)		6
2024	46	—		—		—		—		(0.71)		16
2025	9	—		—		—		—		(0.64)		4
Total	518											$	76

	Volume (MBbls)	Weighted Average Strike Price per Bbl								Fair Value at June 30, 2022 (in millions)
		Swaps		Sold Puts		Purchased Puts		Sold Calls
Oil
2022
Fixed price swaps	1,622	$	53.11	$	—	$	—	$	—	$	(73)
Three-way costless collars	691	—		39.80		50.13		56.99		(29)
Total	2,313									$	(102)
2023
Fixed price swaps	915	$	58.11	$	—	$	—	$	—	$	(25)
Three-way costless collars	1,268	—		33.97		45.51		56.12		(40)
Total	2,183									$	(65)
2024
Fixed price swaps	749	$	70.63	$	—	$	—	$	—	$	(5)
2025
Fixed price swaps	41	$	77.66	$	—	$	—	$	—	$	—
Ethane
2022
Fixed price swaps	2,782	$	11.35	$	—	$	—	$	—	$	(29)
2023
Fixed price swaps	1,308	$	11.91	$	—	$	—	$	—	$	(6)
Propane
2022
Fixed price swaps	3,073	$	31.22	$	—	$	—	$	—	$	(62)
Three-way costless collars	154	—		16.80		21.00		31.92		(3)
Total	3,227									$	(65)
2023
Fixed price swaps	1,286	$	38.04	$	—	$	—	$	—	$	(8)
2024
Fixed price swaps	73	$	42.32	$	—	$	—	$	—	$	—
Normal Butane
2022
Fixed price swaps	929	$	36.22	$	—	$	—	$	—	$	(23)
2023
Fixed price swaps	347	$	41.24	$	—	$	—	$	—	$	(3)
Natural Gasoline
2022
Fixed price swaps	1,001	$	55.78	$	—	$	—	$	—	$	(28)
2023
Fixed price swaps	359	$	66.00	$	—	$	—	$	—	$	(5)

Other Derivative Contracts
	Volume (Bcf)	Weighted Average Strike Price per MMBtu		Fair Value at June 30, 2022 (in millions)
Call Options – Natural Gas (Net)
2022	42	$	3.01	$	(112)
2023	46	2.94		(85)
2024	9	3.00		(18)
Total	97			$	(215)

Balance Sheet Classification of Derivative Financial Instruments

The balance sheet classification of the assets and liabilities related to derivative financial instruments are summarized below as of June 30, 2022 and December 31, 2021:

Derivative Assets
		Fair Value
(in millions)	Balance Sheet Classification	June 30, 2022		December 31, 2021
Derivatives not designated as hedging instruments:
Fixed price swaps – natural gas	Derivative assets	$	—	$	79
Fixed price swaps – ethane	Derivative assets	—		2
Fixed price swaps – propane	Derivative assets	—		2
Fixed price swaps – normal butane	Derivative assets	—		1
Two-way costless collars – natural gas	Derivative assets	20		9
Three-way costless collars – natural gas	Derivative assets	11		12
Three-way costless collars – oil	Derivative assets	—		1
Basis swaps – natural gas	Derivative assets	91		77
Fixed price swaps – natural gas	Other long-term assets	—		64
Two-way costless collars – natural gas	Other long-term assets	31		100
Three-way costless collars – natural gas	Other long-term assets	10		37
Three-way costless collars – oil	Other long-term assets	1		3
Basis swaps – natural gas	Other long-term assets	88		22
Interest rate swaps	Other long-term assets	—		2
Total derivative assets		$	252	$	411

Derivative Liabilities
		Fair Value
(in millions)	Balance Sheet Classification	June 30, 2022		December 31, 2021
Derivatives not designated as hedging instruments:
Fixed price swaps – natural gas storage	Derivative liabilities	$	—	$	1
Fixed price swaps – natural gas	Derivative liabilities	1,532		565
Fixed price swaps – oil	Derivative liabilities	86		60
Fixed price swaps – ethane	Derivative liabilities	33		10
Fixed price swaps – propane	Derivative liabilities	67		78
Fixed price swaps – normal butane	Derivative liabilities	25		27
Fixed price swaps – natural gasoline	Derivative liabilities	31		33
Two-way costless collars – natural gas	Derivative liabilities	291		104
Two-way costless collars – ethane	Derivative liabilities	—		1
Three-way costless collars – natural gas	Derivative liabilities	760		298
Three-way costless collars – oil	Derivative liabilities	52		24
Three-way costless collars – propane	Derivative liabilities	3		4
Basis swaps – natural gas	Derivative liabilities	95		9
Call options – natural gas	Derivative liabilities	154		67
Fixed price swaps – natural gas	Long-term derivative liabilities	650		246
Fixed price swaps – oil	Long-term derivative liabilities	17		9
Fixed price swaps – ethane	Long-term derivative liabilities	2		—
Fixed price swaps – propane	Long-term derivative liabilities	3		1
Fixed price swaps – normal butane	Long-term derivative liabilities	1		—
Fixed price swaps – natural gasoline	Long-term derivative liabilities	2		1
Two-way costless collars – natural gas	Long-term derivative liabilities	203		115
Three-way costless collars – natural gas	Long-term derivative liabilities	182		178
Three-way costless collars – oil	Long-term derivative liabilities	18		21
Basis swap – natural gas	Long-term derivative liabilities	8		22
Call options – natural gas	Long-term derivative liabilities	61		42
Total derivative liabilities		$	4,276	$	1,916

Net Derivative Position
	June 30, 2022		December 31, 2021
(in millions)
Net current derivative liabilities	$	(3,007)	$	(1,098)
Net long-term derivative liabilities	(1,017)		(407)
Non-performance risk adjustment	12		3
Net total derivative liabilities	$	(4,012)	$	(1,502)

Summary of Before Tax Effect of Fair Value Hedges not Designated for Hedge Accounting

The following tables summarize the before-tax effect of the Company’s derivative instruments on the consolidated statements of operations for the three and six months ended June 30, 2022 and 2021:

Unsettled Gain (Loss) on Derivatives Recognized in Earnings
	Consolidated Statement of Operations Classification of Gain (Loss) on Derivatives, Unsettled	For the three months ended June 30,				For the six months ended June 30,
Derivative Instrument		2022		2021		2022		2021
		(in millions)
Purchased fixed price swaps – natural gas	Gain (Loss) on Derivatives	$	—	$	2	$	—	$	2
Fixed price swaps – natural gas	Gain (Loss) on Derivatives	339		(221)		(1,514)		(243)
Fixed price swaps – oil	Gain (Loss) on Derivatives	19		(41)		(34)		(81)
Fixed price swaps – ethane	Gain (Loss) on Derivatives	(6)		(11)		(27)		(13)
Fixed price swaps – propane	Gain (Loss) on Derivatives	56		(43)		7		(88)
Fixed price swaps – normal butane	Gain (Loss) on Derivatives	20		(19)		—		(34)
Fixed price swaps – natural gasoline	Gain (Loss) on Derivatives	29		(11)		1		(31)
Two-way costless collars – natural gas	Gain (Loss) on Derivatives	9		(148)		(333)		(160)
Two-way costless collars – oil	Gain (Loss) on Derivatives	—		—		—		(1)
Two-way costless collars – ethane	Gain (Loss) on Derivatives	—		(1)		1		(1)
Three-way costless collars – natural gas	Gain (Loss) on Derivatives	230		(249)		(494)		(249)
Three-way costless collars – oil	Gain (Loss) on Derivatives	5		(29)		(28)		(47)
Three-way costless collars – propane	Gain (Loss) on Derivatives	3		(1)		1		(2)
Basis swaps – natural gas	Gain (Loss) on Derivatives	(28)		44		8		47
Call options – natural gas	Gain (Loss) on Derivatives	43		(40)		(106)		(37)
Call options – oil	Gain (Loss) on Derivatives	—		—		—		(1)
Put options – natural gas	Gain (Loss) on Derivatives	—		1		—		1
Swaptions – natural gas	Gain (Loss) on Derivatives	—		(4)		—		(3)
Purchased fixed price swap – natural gas storage	Gain (Loss) on Derivatives	(1)		1		—		1
Fixed price swap – natural gas storage	Gain (Loss) on Derivatives	—		(2)		1		(2)
Interest rate swaps	Gain (Loss) on Derivatives	—		—		(2)		1
Total gain (loss) on unsettled derivatives		$	718	$	(772)	$	(2,519)	$	(941)

Settled Gain (Loss) on Derivatives Recognized in Earnings (1)
	Consolidated Statement of Operations Classification of Gain (Loss) on Derivatives, Settled	For the three months ended June 30,					For the six months ended June 30,
Derivative Instrument		2022			2021		2022			2021
		(in millions)
Purchased fixed price swaps - natural gas	Gain (Loss) on Derivatives	$	1		$	1	$	1		1
Fixed price swaps – natural gas	Gain (Loss) on Derivatives	(870)			(6)		(1,167)			(1)
Fixed price swaps – oil	Gain (Loss) on Derivatives	(41)			(28)		(74)			(45)
Fixed price swaps – ethane	Gain (Loss) on Derivatives	(19)			(6)		(27)			(10)
Fixed price swaps – propane	Gain (Loss) on Derivatives	(34)			(30)		(75)			(60)
Fixed price swaps – normal butane	Gain (Loss) on Derivatives	(12)			(9)		(26)			(16)
Fixed price swaps – natural gasoline	Gain (Loss) on Derivatives	(17)			(13)		(36)			(22)
Two-way costless collars – natural gas	Gain (Loss) on Derivatives	(130)			(2)		(234)			—
Two-way costless collars – oil	Gain (Loss) on Derivatives	—			(1)		—			(2)
Two-way costless collars – ethane	Gain (Loss) on Derivatives	—			—		(1)			—
Three-way costless collars – natural gas	Gain (Loss) on Derivatives	(396)			(8)		(517)			(7)
Three-way costless collars – oil	Gain (Loss) on Derivatives	(18)			(5)		(31)			(6)
Three-way costless collars – propane	Gain (Loss) on Derivatives	(1)			—		(3)			—
Basis swaps – natural gas	Gain (Loss) on Derivatives	23			8		24			49
Index swaps – natural gas	Gain (Loss) on Derivatives	—			—		(1)			—
Call options – natural gas	Gain (Loss) on Derivatives	(87)			—		(126)			—
Put options – natural gas	Gain (Loss) on Derivatives	—			—		—			(2)		(2)
Fixed price swaps – natural gas storage	Gain (Loss) on Derivatives	—			—		(3)			—
Total loss on settled derivatives		$	(1,601)		$	(99)	$	(2,296)		$	(121)
Total loss on derivatives		$	(879)	(1)	$	(871)	$	(4,806)	(1)	$	(1,062)

(1)The Company calculates gain (loss) on derivatives, settled, as the summation of gains and losses on positions that settled within the period.

(2)Includes $2 million in amortization of premiums paid related to certain natural gas put options for the six months ended June 30, 2021, which is included in gain (loss) on derivatives on the consolidated statements of operations.

Total Gain (Loss) on Derivatives Recognized in Earnings
	For the three months ended June 30,				For the six months ended June 30,
	2022		2021		2022		2021
	(in millions)
Total gain (loss) on unsettled derivatives	$	718	$	(772)	$	(2,519)	$	(941)
Total loss on settled derivatives	(1,601)		(99)		(2,296)		(121)
Non-performance risk adjustment	4		—		9		—
Total loss on derivatives	$	(879)	$	(871)	$	(4,806)	$	(1,062)