COMMODITY DERIVATIVE FINANCIAL INSTRUMENTS

6 Months Ended

Jun. 30, 2021

Investments, All Other Investments [Abstract]

COMMODITY DERIVATIVE FINANCIAL INSTRUMENTS

9.       COMMODITY DERIVATIVE FINANCIAL INSTRUMENTS

The Company uses derivative financial instruments to manage its exposure to commodity price fluctuations. Commodity derivative instruments are used to reduce the effect of volatility of price changes on the oil and natural gas the Company produces and sells. The Company does not enter into derivative financial instruments for speculative or trading purposes. The Company’s derivative financial instruments consist of oil swaps.

The Company does not designate its derivative instruments to qualify for hedge accounting. Accordingly, the Company reflects changes in the fair value of its derivative instruments in its condensed consolidated statements of operations as they occur. Unrealized gains and losses related to the swap contracts are recognized and recorded as an asset or liability on the Company’s condensed consolidated balance sheets.

The following table summarizes the net realized and unrealized amounts reported in earnings related to the commodity derivative instruments for the three and six months ended June 30, 2021 and 2020:

	Three months ended June 30,						Six months ended June 30,
	2021			2020			2021			2020
Gain (loss) on derivatives:
Oil derivatives	$	(182,034	)		(402,374	)	$	(539,949	)	$	2,106,671
Natural gas derivatives		—			—			—			—
Total	$	(182,034	)		(402,374	)	$	(539,949	)	$	2,106,671

The following represents the Company’s net cash receipts from (payments on) derivatives for the three and six months ended June 30, 2021 and 2020:

	Three months ended June 30,					Six months ended June 30,
	2021			2020		2021			2020
Net cash received from payments on derivatives
Oil derivatives	$	(230,279	)	$	510,609	$	(358,224	)	$	1,043,894
Natural gas derivatives		—			—		—			—
Total	$	(230,279	)	$	510,609	$	(358,224	)	$	1,043,894

The following table sets forth the Company’s outstanding derivative contracts at June 30, 2021. The Company has no outstanding natural gas derivatives.

	3rd Quarter		4th Quarter
2021
Oil Swaps:
Quarterly volume (MBbl)		5.20		—
Price per Bbl	$	38.25		—