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Derivative Financial Instruments
 3 Months Ended
Mar. 31, 2025
Derivative Instruments Not Designated as Hedging Instruments [Abstract]  
Derivative Financial Instruments
Note 7 - Derivative Financial Instruments
Summary of Oil, Gas, and NGL Derivative Contracts in Place
The Company regularly enters into commodity derivative contracts to mitigate a portion of its exposure to oil, gas, and NGL price volatility and location differentials, and the associated effect on cash flows. All commodity derivative contracts that the Company enters into are for other-than-trading purposes. The Company’s commodity derivative contracts consist of price swap and collar arrangements for oil and gas production, and price swap arrangements for NGL production. In a typical commodity swap agreement, if the agreed upon published third-party index price (“index price”) is lower than the swap price, the Company receives the difference between the index price and the agreed upon swap price. If the index price is higher than the swap price, the Company pays the difference. For collar arrangements, the Company receives the difference between an agreed upon index price and the floor price if the index price is below the floor price. The Company pays the difference between the agreed upon ceiling price and the index price if the index price is above the ceiling price. No amounts are paid or received if the index price is between the floor and ceiling prices.
The Company has entered into fixed price oil and gas basis swaps in order to mitigate exposure to adverse pricing differentials between certain industry benchmark prices and the actual physical pricing points where the Company’s production is sold. As of March 31, 2025, the Company had basis swap contracts with fixed price differentials between:
•NYMEX WTI and Argus WTI Midland (“WTI Midland”) for a portion of its Midland Basin oil production with sales contracts that settle at WTI Midland prices;
•NYMEX WTI and Argus WTI Houston Magellan East Houston Terminal (“WTI Houston MEH”) for a portion of its South Texas and Uinta Basin oil production with sales contracts that settle at WTI Houston MEH prices; and
•NYMEX Henry Hub (“HH”) and Inside FERC West Texas (“IF Waha”) for a portion of its Midland Basin gas production with sales contracts that settle at IF Waha prices.
The Company has also entered into oil swap contracts to fix the differential in pricing between the NYMEX calendar month average and the physical crude oil delivery month (“Roll Differential”) in which the Company pays the periodic variable Roll Differential and receives a weighted-average fixed price differential. The weighted-average fixed price differential represents the amount of net addition (reduction) to delivery month prices for the notional volumes covered by the swap contracts.
As of March 31, 2025, the Company had commodity derivative contracts outstanding through the first quarter of 2027 as summarized in the table below:
Contract Period
Second Quarter 2025Third Quarter 2025Fourth Quarter 202520262027
Oil Derivatives (volumes in MBbl and prices in $ per Bbl):
Swaps
NYMEX WTI Volumes2,479 2,166 1,012 — — 
Weighted-Average Contract Price$70.55 $71.09 $69.99 $— $— 
Collars
NYMEX WTI Volumes1,178 741 1,212 465 — 
Weighted-Average Floor Price$66.25 $63.76 $65.00 $60.00 $— 
Weighted-Average Ceiling Price$81.70 $80.98 $75.67 $66.50 $— 
Basis Swaps
WTI Midland-NYMEX WTI Volumes
1,118 1,104 1,178 4,045 — 
Weighted-Average Contract Price$1.18 $1.18 $1.18 $0.99 $— 
WTI Houston MEH-NYMEX WTI Volumes
544 544 526 1,546 — 
Weighted-Average Contract Price$1.86 $1.86 $1.86 $2.02 $— 
Roll Differential Swaps
NYMEX WTI Volumes2,410 2,421 2,420 — — 
Weighted-Average Contract Price$0.44 $0.44 $0.44 $— $— 
Gas Derivatives (volumes in BBtu and prices in $ per MMBtu):
Swaps
NYMEX HH Volumes
7,028 7,370 6,175 21,406 6,992 
Weighted-Average Contract Price$3.89 $4.23 $4.33 $3.82 $4.32 
Inside FERC Houston Ship Channel Volumes
— — — 957 — 
Weighted-Average Contract Price$— $— $— $4.07 $— 
IF Waha Volumes
— — — 3,348 4,094 
Weighted-Average Contract Price$— $— $— $3.12 $3.63 
Collars
NYMEX HH Volumes
5,893 7,497 7,982 17,158 — 
Weighted-Average Floor Price$3.25 $3.24 $3.25 $3.33 $— 
Weighted-Average Ceiling Price$3.58 $4.12 $5.31 $5.01 $— 
Basis Swaps
IF Waha-NYMEX HH Volumes
5,236 5,117 5,046 — — 
Weighted-Average Contract Price$(0.78)$(0.72)$(0.66)$— $— 
NGL Derivatives (volumes in MBbl and prices in $ per Bbl):
Swaps
OPIS Propane Mont Belvieu Non-TET Volumes151 — — — — 
Weighted-Average Contract Price$32.81 $— $— $— $— 
OPIS Ethane Mont Belvieu Non-TET Volumes— — 123 674 — 
Weighted-Average Contract Price$— $— $13.07 $12.04 $— 
Commodity Derivative Contracts Entered Into Subsequent to March 31, 2025
Subsequent to March 31, 2025, and through the filing of this report, the Company entered into the following commodity derivative contracts:
Contract Period
Third Quarter 2025Fourth Quarter 202520262027
Oil Derivatives (volumes in MBbl and prices in $ per Bbl):
Collars
NYMEX WTI Volumes502 948 1,810 — 
Weighted-Average Floor Price$55.00 $55.00 $55.00 $— 
Weighted-Average Ceiling Price$67.14 $64.35 $64.03 $— 
Gas Derivatives (volumes in BBtu and prices in $ per MMBtu):
Swaps
NYMEX HH Volumes
2,887 — — — 
Weighted-Average Contract Price$4.00 $— $— $— 
Collars
NYMEX HH Volumes
— — 1,800 — 
Weighted-Average Floor Price$— $— $4.00 $— 
Weighted-Average Ceiling Price$— $— $5.37 $— 
Basis Swaps
IF Waha-NYMEX HH Volumes
— — 574 1,008 
Weighted-Average Contract Price$— $— $(1.75)$(0.70)
Derivative Assets and Liabilities Fair Value
The Company’s commodity derivatives are measured at fair value and are included in the accompanying balance sheets as derivative assets and liabilities, with the exception of derivative instruments that meet the “normal purchase normal sale” exclusion. The Company does not designate its commodity derivative contracts as hedging instruments. The fair value of commodity derivative contracts at March 31, 2025, and December 31, 2024, was a net asset of $13.3 million and $38.3 million, respectively.
The following table details the fair value of commodity derivative contracts recorded in the accompanying balance sheets:
As of March 31, 2025As of December 31, 2024
(in thousands)
Derivative assets:
Current assets$60,640 $48,522 
Noncurrent assets3,533 3,973 
Total derivative assets$64,173 $52,495 
Derivative liabilities:
Current liabilities$33,423 $7,058 
Noncurrent liabilities17,421 7,142 
Total derivative liabilities$50,844 $14,200 
Offsetting of Derivative Assets and Liabilities
As of March 31, 2025, and December 31, 2024, all derivative instruments held by the Company were subject to master netting arrangements with various financial institutions. In general, the terms of the Company’s agreements provide for offsetting of amounts payable or receivable between it and the counterparty, at the election of both parties, for transactions that settle on the same date and in the same currency. The Company’s agreements also provide that in the event of an early termination, the counterparties have the right to offset amounts owed or owing under that and any other agreement with the same counterparty. The Company’s accounting
policy is to not offset these positions in its accompanying balance sheets.
The following table provides a reconciliation between the gross assets and liabilities reflected on the accompanying balance sheets and the potential effects of master netting arrangements on the fair value of the Company’s commodity derivative contracts:
Derivative Assets as ofDerivative Liabilities as of
March 31,
2025		December 31, 2024March 31,
2025		December 31, 2024
(in thousands)
Gross amounts presented in the accompanying balance sheets$64,173 $52,495 $(50,844)$(14,200)
Amounts not offset in the accompanying balance sheets(27,708)(12,995)27,708 12,995 
Net amounts$36,465 $39,500 $(23,136)$(1,205)
The following table summarizes the commodity components of the net derivative settlement gain, and the net derivative loss line items presented within the accompanying unaudited condensed consolidated statements of cash flows (“accompanying statements of cash flows”) and the accompanying statements of operations, respectively:
For the Three Months Ended March 31,
20252024
(in thousands)
Net derivative settlement (gain) loss:
Oil contracts$(2,883)$(2,525)
Gas contracts(7,195)(12,220)
NGL contracts2,327 1,471 
Total net derivative settlement gain$(7,751)$(13,274)
Net derivative (gain) loss:
Oil contracts$2,873 $37,099 
Gas contracts12,074 (14,828)
NGL contracts2,269 5,874 
Total net derivative loss$17,216 $28,145 
Credit Related Contingent Features
As of March 31, 2025, all of the Company’s derivative counterparties were members of the Company’s Credit Agreement lender group. The Company does not enter into derivative contracts with counterparties that are not part of the lender group. Under the Credit Agreement, the Company is required to provide mortgage liens on assets having a value equal to at least 85 percent of the total PV-9, as defined in the Credit Agreement, of the Company’s proved oil and gas properties evaluated in the most recent reserve report. Collateral securing indebtedness under the Credit Agreement also secures the Company’s derivative agreement obligations.