DERIVATIVES

12 Months Ended

Dec. 31, 2021

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. As of December 31, 2021, our commodity 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. We are not required to post any cash collateral with our counterparties and no collateral has been posted as of December 31, 2021.

The following non-designated hedges were outstanding as of December 31, 2021:

Term	Commodity	Contracted Volume	Weighted Average  Fixed Price for Swaps	Contracted Market
Jan'22 - Dec'22	Natural gas - swap	5,000 MMBtu/day	$2.61	IF - NYMEX (HH)
Jan'23 - Dec'23	Natural gas - swap	22,000 MMBtu/day	$2.46	IF - NYMEX (HH)
Jan'22 - Dec'22	Natural gas - collar	35,000 MMBtu/day	$2.50 - $2.68	IF - NYMEX (HH)
Jan'22 - Jun'22	Crude oil - swap	986 Bbl/day	$70.30	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

Warrants

We recognize the fair value of the warrants as a derivative liability on our consolidated balance sheets with changes in the liability reported as loss on change in fair value of warrants in our consolidated statements of operations. The liability will continue to be adjusted to fair value at each reporting period until the warrants meet the definition of an equity instrument, at which time they will be reported as shareholders' equity and no longer subject to future fair value adjustments.

The following tables present the recognized derivative assets and liabilities on our consolidated balance sheets as of the dates identified:

		As of December 31, 2021
	Balance Sheet Classification	Presented Gross		Effects of Netting		Presented Net
		(In thousands)
Liabilities:
Current Commodity Derivatives	Current derivative liabilities	$	40,876	$	—	$	40,876
Long-term Commodity Derivatives	Non-current derivative liabilities	17,855		—		17,855
Warrant Liability	Warrant liability	19,822		—		19,822
Total derivative liabilities		$	78,553	$	—	$	78,553

		As of December 31, 2020
	Balance Sheet Classification	Presented Gross		Effects of Netting		Presented Net
		(In thousands)
Assets:
Current commodity derivatives	Current derivative assets	$	3,292	$	(3,292)	$	—
Long-term commodity derivatives	Non-current derivative assets	144		(144)		—
Total derivative assets		$	3,436	$	(3,436)	$	—
Liabilities:
Current Commodity Derivatives	Current derivative liabilities	$	4,339	$	(3,292)	$	1,047
Long-term Commodity Derivatives	Non-current derivative liabilities	4,803		(144)		4,659
Warrant Liability	Warrant liability	885		—		885
Total derivative liabilities		$	10,027	$	(3,436)	$	6,591

The following table shows the activity related to derivative instruments in the consolidated statements of operations for the periods indicated:

	Successor				Predecessor
	Year Ended December 31, 2021		Four Months Ended December 31, 2020		Eight Months Ended August 31, 2020
	(In thousands)
Loss on derivatives	$	(97,615)	$	(985)	$	(10,704)
Cash settlements paid on commodity derivatives	(44,591)		(1,133)		(4,244)
Loss on derivatives less cash settlements paid on commodity derivatives	$	(53,025)	$	148	$	(6,460)
Loss on change in fair value of warrants	$	(18,937)	$	—	$	—