Derivatives and Risk Management (Tables)

6 Months Ended

Jun. 30, 2023

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, 2023:

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, 2023 (in millions)
Natural Gas
2023
Fixed price swaps	348	$	3.25	$	—	$	—	$	—	$	—	$	91
Two-way costless collars	78	—		—		2.83		3.21		—		4
Three-way costless collars	95	—		2.08		2.50		2.91		—		(28)
Total	521											$	67
2024
Fixed price swaps	528	$	3.54	$	—	$	—	$	—	$	—	$	12
Two-way costless collars	44	—		—		3.07		3.53		—		(10)
Three-way costless collars	11	—		2.25		2.80		3.54		—		(7)
Total	583											$	(5)
2025
Two-way costless collars	73	$	—	$	—	$	3.50	$	5.40	$	—	$	10
Three-way costless collars	106	—		2.50		3.75		5.69		—		15
Total	179											$	25
Basis Swaps
2023	146	$	—	$	—	$	—	$	—	$	(0.62)	$	68
2024	46	—		—		—		—		(0.71)		8
2025	9	—		—		—		—		(0.64)		3
Total	201											$	79

	Volume (MBbls)	Weighted Average Strike Price per Bbl								Fair Value at June 30, 2023 (in millions)
		Swaps		Sold Puts		Purchased Puts		Sold Calls
Oil
2023
Fixed price swaps	1,466	$	67.34	$	—	$	—	$	—	$	(4)
Two-way costless collars	294	—		—		70.00		80.58		1
Three-way costless collars	582	—		34.36		46.05		55.96		(9)
Total	2,342									$	(12)
2024
Fixed price swaps	1,571	$	71.06	$	—	$	—	$	—	$	3
Two-way costless collars	146	—		—		70.00		78.25		—
Total	1,717									$	3
2025
Fixed price swaps	41	$	77.66	$	—	$	—	$	—	$	—
Ethane
2023
Fixed price swaps	4,499	$	11.01	$	—	$	—	$	—	$	4
2024
Fixed price swaps	1,305	$	10.81	$	—	$	—	$	—	$	—
Propane
2023
Fixed price swaps	3,601	$	32.19	$	—	$	—	$	—	$	28
2024
Fixed price swaps	1,460	$	33.29	$	—	$	—	$	—	$	11
Normal Butane
2023
Fixed price swaps	396	$	40.96	$	—	$	—	$	—	$	5
2024
Fixed price swaps	329	$	40.74	$	—	$	—	$	—	$	3
Natural Gasoline
2023
Fixed price swaps	342	$	63.74	$	—	$	—	$	—	$	4
2024
Fixed price swaps	329	$	64.37	$	—	$	—	$	—	$	3

Other Derivative Contracts
	Volume (Bcf)	Weighted Average Strike Price per MMBtu		Fair Value at June 30, 2023 (in millions)
Call Options – Natural Gas (Net)
2023	25	$	2.96	$	(11)
2024	82	6.56		(15)
2025	73	7.00		(15)
2026	73	7.00		(20)
Total	253			$	(61)

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, 2023 and December 31, 2022:

Derivative Assets
		Fair Value
(in millions)	Balance Sheet Classification	June 30, 2023		December 31, 2022
Derivatives not designated as hedging instruments:
Fixed price swaps – natural gas	Derivative assets	$	207	$	—
Fixed price swaps – oil	Derivative assets	4		—
Fixed price swaps – ethane	Derivative assets	6		4
Fixed price swaps – propane	Derivative assets	37		9
Fixed price swaps – normal butane	Derivative assets	6		1
Fixed price swaps – natural gasoline	Derivative assets	5		1
Two-way costless collars – natural gas	Derivative assets	64		47
Two-way costless collars – oil	Derivative assets	3		—
Three-way costless collars – natural gas	Derivative assets	14		18
Three-way costless collars – oil	Derivative assets	—		1
Basis swaps – natural gas	Derivative assets	73		64
Put options – natural gas	Derivative assets	5		—
Fixed price swaps – natural gas	Other long-term assets	69		28
Fixed price swaps – oil	Other long-term assets	2		1
Fixed price swaps – ethane	Other long-term assets	—		1
Fixed price swaps – propane	Other long-term assets	2		1
Fixed price swaps – normal butane	Other long-term assets	2		—
Fixed price swaps – natural gasoline	Other long-term assets	2		—
Two-way costless collars – natural gas	Other long-term assets	48		18
Three-way costless collars – natural gas	Other long-term assets	71		3
Basis swaps – natural gas	Other long-term assets	11		17
Put options – natural gas	Other long-term assets	—		4
Total derivative assets		$	631	$	218

Derivative Liabilities
		Fair Value
(in millions)	Balance Sheet Classification	June 30, 2023		December 31, 2022
Derivatives not designated as hedging instruments:
Fixed price swaps – natural gas	Derivative liabilities	$	105	$	581
Fixed price swaps – oil	Derivative liabilities	7		20
Fixed price swaps – ethane	Derivative liabilities	2		1
Fixed price swaps – natural gasoline	Derivative liabilities	—		1
Two-way costless collars – natural gas	Derivative liabilities	64		235
Two-way costless collars – oil	Derivative liabilities	2		—
Three-way costless collars – natural gas	Derivative liabilities	49		311
Three-way costless collars – oil	Derivative liabilities	9		31
Basis swaps – natural gas	Derivative liabilities	5		69
Call options – natural gas	Derivative liabilities	23		70
Put options – natural gas	Derivative liabilities	5		—
Fixed price swaps – natural gas	Long-term derivative liabilities	68		281
Fixed price swaps – oil	Long-term derivative liabilities	—		4
Two-way costless collars – natural gas	Long-term derivative liabilities	44		56
Three-way costless collars – natural gas	Long-term derivative liabilities	56		20
Basis swap – natural gas	Long-term derivative liabilities	—		1
Call options – natural gas	Long-term derivative liabilities	38		18
Total derivative liabilities		$	477	$	1,699

Net Derivative Position
	June 30, 2023		December 31, 2022
(in millions)
Net current derivative asset (liability)	$	153	$	(1,174)
Net long-term derivative asset (liability)	1		(307)
Non-performance risk adjustment	(1)		3
Net total derivative asset (liability)	$	153	$	(1,478)

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, 2023 and 2022:

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		2023		2022		2023		2022
		(in millions)
Fixed price swaps – natural gas	Gain (Loss) on Derivatives	$	(24)	$	339	937		(1,514)
Fixed price swaps – oil	Gain (Loss) on Derivatives	10		19		22		(34)
Fixed price swaps – ethane	Gain (Loss) on Derivatives	(9)		(6)		—		(27)
Fixed price swaps – propane	Gain (Loss) on Derivatives	28		56		29		7
Fixed price swaps – normal butane	Gain (Loss) on Derivatives	6		20		7		—
Fixed price swaps – natural gasoline	Gain (Loss) on Derivatives	6		29		7		1
Two-way costless collars – natural gas	Gain (Loss) on Derivatives	(11)		9		230		(333)
Two-way costless collars – oil	Gain (Loss) on Derivatives	1		—		1		—
Two-way costless collars – ethane	Gain (Loss) on Derivatives	—		—		—		1
Three-way costless collars – natural gas	Gain (Loss) on Derivatives	27		230		290		(494)
Three-way costless collars – oil	Gain (Loss) on Derivatives	9		5		21		(28)
Three-way costless collars – propane	Gain (Loss) on Derivatives	—		3		—		1
Basis swaps – natural gas	Gain (Loss) on Derivatives	98		(28)		68		8
Call options – natural gas	Gain (Loss) on Derivatives	(34)		43		27		(106)
Put options – natural gas	Gain (Loss) on Derivatives	—		—		(4)		—
Purchased fixed price swap – natural gas storage	Gain (Loss) on Derivatives	—		(1)		—		—
Fixed price swap – natural gas storage	Gain (Loss) on Derivatives	—		—		—		1
Interest rate swaps	Gain (Loss) on Derivatives	—		—		—		(2)
Total gain (loss) on unsettled derivatives		$	107	$	718	$	1,635	$	(2,519)
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		2023		2022		2023		2022
		(in millions)
Fixed price swaps – natural gas	Gain (Loss) on Derivatives	$	160	$	(870)	$	115	$	(1,167)
Fixed price swaps – oil	Gain (Loss) on Derivatives	(3)		(41)		(7)		(74)
Fixed price swaps – ethane	Gain (Loss) on Derivatives	5		(19)		6		(27)
Fixed price swaps – propane	Gain (Loss) on Derivatives	11		(34)		12		(75)
Fixed price swaps – normal butane	Gain (Loss) on Derivatives	1		(12)		1		(26)
Fixed price swaps – natural gasoline	Gain (Loss) on Derivatives	1		(17)		1		(36)
Two-way costless collars – natural gas	Gain (Loss) on Derivatives	31		(130)		31		(234)
Two-way costless collars – ethane	Gain (Loss) on Derivatives	—		—		—		(1)
Three-way costless collars – natural gas	Gain (Loss) on Derivatives	17		(396)		(16)		(517)
Three-way costless collars – oil	Gain (Loss) on Derivatives	(6)		(18)		(13)		(31)
Three-way costless collars – propane	Gain (Loss) on Derivatives	—		(1)		—		(3)
Basis swaps – natural gas	Gain (Loss) on Derivatives	(7)		23		(36)		24
Index swaps – natural gas	Gain (Loss) on Derivatives	—		—		—		(1)
Call options – natural gas	Gain (Loss) on Derivatives	—		(87)		(7)		(126)
Purchased fixed price swaps – natural gas	Gain (Loss) on Derivatives	—		1		—		1
Fixed price swaps – natural gas storage	Gain (Loss) on Derivatives	—		—		—		(3)
Total gain (loss) on settled derivatives		$	210	$	(1,601)	$	87	$	(2,296)
Total gain (loss) on derivatives (2)		$	317	$	(879)	$	1,718	$	(4,806)

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

(2)Total gain (loss) on derivatives includes non-performance risk adjustments of $4 million in gains for the three months ended June 30, 2022 and $4 million in losses and $9 million in gains for the six months ended June 30, 2023 and June 30, 2022, respectively.

Total Gain (Loss) on Derivatives Recognized in Earnings
	For the three months ended June 30,				For the six months ended June 30,
	2023		2022		2023		2022
	(in millions)
Total gain (loss) on unsettled derivatives	$	107	$	718	$	1,635	$	(2,519)
Total gain (loss) on settled derivatives	210		(1,601)		87		(2,296)
Non-performance risk adjustment	—		4		(4)		9
Total gain (loss) on derivatives	$	317	$	(879)	$	1,718	$	(4,806)