Derivatives

12 Months Ended

Dec. 31, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives

DERIVATIVES

Commodity Derivatives

We have entered into various types of derivative transactions covering some of our projected natural gas, NGLs, and oil production. These transactions are intended to reduce our exposure to market price volatility by setting the price(s) we will receive for that production. Our decisions on the price(s), type, and quantity of our production subject to a derivative contract are based, in part, on our view of current and future market conditions as well as certain requirements stipulated in the Exit Credit Agreement. For further details, see Note 9 – Long-Term Debt And Other Long-Term Liabilities. As of December 31, 2020, our derivative transactions consisted of the following types of hedges:

•Basis/Differential Swaps. We receive or pay the NYMEX settlement value plus or minus a fixed delivery point price for the commodity and pay or receive the published index price at the specified delivery point. We use basis/differential swaps to hedge the price risk between NYMEX and its physical delivery points.

•Swaps. We receive or pay a fixed price for the commodity and pay or receive a floating market price to the counterparty. The fixed-price payment and the floating-price payment are netted, resulting in a net amount due to or from the counterparty.

•Collars. A collar contains a fixed floor price (put) and a ceiling price (call). If the market price exceeds the call strike price or falls below the put strike price, we receive the fixed price and pay the market price. If the market price is between the call and the put strike price, no payments are due from either party. 

We do not engage in derivative transactions for speculative purposes. All derivatives are recognized on the balance sheet and measured at fair value. Any changes in our derivatives' fair value occurring before their maturity (i.e., temporary fluctuations in value) are reported in gain (loss) on derivatives in our Consolidated Statements of Operations.

At December 31, 2020, the following non-designated hedges were outstanding:

Term	Commodity	Contracted Volume	Weighted Average  Fixed Price for Swaps	Contracted Market
Jan'21 - Dec'21	Natural gas - basis swap	30,000 MMBtu/day	$(0.215)	NGPL TEXOK
Jan'21 - Oct'21	Natural gas - swap	50,000 MMBtu/day	$2.818	IF - NYMEX (HH)
Nov'21 - Dec'21	Natural gas - swap	45,000 MMBtu/day	$2.900	IF - NYMEX (HH)
Jan'22 - Dec'22	Natural gas - swap	5,000 MMBtu/day	$2.605	IF - NYMEX (HH)
Jan'23 - Dec'23	Natural gas - swap	22,000 MMBtu/day	$2.456	IF - NYMEX (HH)
Jan'22 - Dec'22	Natural gas - collar	35,000 MMBtu/day	$2.50 - $2.68	IF - NYMEX (HH)
Jan'21 - Dec'21	Crude oil - swap	3,000 Bbl/day	$44.65	WTI - NYMEX
Jan'22 - Dec'22	Crude oil - swap	2,300 Bbl/day	$42.25	WTI - NYMEX
Jan'23 - Dec'23	Crude oil - swap	1,300 Bbl/day	$43.60	WTI - NYMEX

The following tables present the fair values and locations of the derivative transactions recorded in our Consolidated Balance Sheets at December 31: 

		Derivative Assets Fair Value
		Successor		Predecessor
	Balance Sheet Location	2020		2019
		(In thousands)
Commodity derivatives:
Current	Current derivative assets	$	—	$	633
Long-term	Non-current derivative assets	—		—
Total derivative assets		$	—	$	633

		Derivative Liabilities Fair Value
		Successor		Predecessor
	Balance Sheet Location	2020		2019
		(In thousands)
Commodity derivatives:
Current	Current derivative liabilities	$	1,047	$	—
Long-term	Non-current derivative liabilities	4,659		27
Total derivative liabilities		$	5,706	$	27

If a legal right of set-off exists, we net the value of the derivative transactions we have with the same counterparty in our Consolidated Balance Sheets.

The following is the Effect of derivative instruments on the Consolidated Statements of Operations for the periods indicated:

Derivatives Instruments	Location of Gain or (Loss) Recognized in Income on Derivative	Amount of Gain or (Loss) Recognized in Income on Derivative
		Successor		Predecessor
		Period September 1, 2020 through December 31, 2020		Period January 1, 2020 through August 31, 2020		For the Year Ended December 31, 2019
		(In thousands)
Commodity derivatives	Gain (loss) on derivatives, included are amounts settled during the period of $(1,133), $(4,244), and $16,196, respectively	$	(985)	$	(10,704)	$	4,225
Total		$	(985)	$	(10,704)	$	4,225