Derivative and Hedging Activities

6 Months Ended

Jun. 30, 2025

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative and Hedging Activities

11. Derivative and Hedging Activities

We use derivative instruments to reduce our exposure to fluctuations in future commodity prices and to protect our expected operating cash flow against significant market movements or volatility. These commodity contract derivative financial instruments include financial price swaps, collars, call options and basis protection swaps. All of our commodity contract derivative instruments are net settled based on the difference between the fixed-price payment and the floating-price payment, resulting in a net amount due to or from the counterparty. We do not intend to hold or issue derivative financial instruments for speculative trading purposes and have elected not to designate any of our derivative instruments for hedge accounting treatment.

The estimated fair values of our natural gas, oil and NGL derivative instrument assets (liabilities) as of June 30, 2025 and December 31, 2024 are provided below: 

	June 30, 2025			December 31, 2024
	Notional Volume	Fair Value		Notional Volume	Fair Value
Natural gas (Bcf):
Fixed-price swaps	296	$	(37)	369	$	(28)
Collars	1,437	(176)		1,098	(27)
Three-way collars	81	23		161	60
Call options (purchased)	37	1		73	1
Call options (sold)	147	(19)		219	(16)
Basis protection swaps	320	22		279	(39)
Total natural gas	2,318	(186)		2,199	(49)
Oil (MMBbls):
Three-way collars	1	$	5	2	$	4
Total oil	1	5		2	4
NGLs (MMBbls):
Fixed-price swaps	4	$	—	7	$	(9)
Total NGL	4	—		7	(9)
Total estimated fair value		$	(181)		$	(54)

The following table presents the fair value and location of each classification of derivative instrument included in the condensed consolidated balance sheets as of June 30, 2025 and December 31, 2024 on a gross basis and after same-counterparty netting:

	Gross Fair Value(a)		Amounts Netted in the Condensed Consolidated Balance Sheets		Net Fair Value Presented in the Condensed Consolidated Balance Sheets
As of June 30, 2025
Commodity Contracts:
Short-term derivative asset	$	138	$	(92)	$	46
Long-term derivative asset	39		(26)		13
Short-term derivative liability	(247)		92		(155)
Long-term derivative liability	(111)		26		(85)
Total derivatives	$	(181)	$	—	$	(181)
As of December 31, 2024
Commodity Contracts:
Short-term derivative asset	$	191	$	(107)	$	84
Long-term derivative asset	6		(5)		1
Short-term derivative liability	(178)		107		(71)
Long-term derivative liability	(73)		5		(68)
Total derivatives	$	(54)	$	—	$	(54)

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(a)These financial assets (liabilities) are measured at fair value on a recurring basis utilizing significant other observable inputs; see further discussion on fair value measurements below.

Fair Value

The fair value of our commodity derivatives is based on third-party pricing models, which utilize inputs that are either readily available in the public market, such as natural gas, oil and NGL forward curves and discount rates, or can be corroborated from active markets or broker quotes, and, as such, are classified as Level 2. These values are compared to the values given by our counterparties for reasonableness. Derivatives are also subject to the risk that either party to a contract will be unable to meet its obligations. We factor non-performance risk into the valuation of our derivatives using current published credit default swap rates. To date, this has not had a material impact on the values of our derivatives.

Credit Risk Considerations

Our derivative instruments expose us to our counterparties’ credit risk. To mitigate this risk, we only enter into commodity contracts derivatives with counterparties that are highly rated or deemed by us to have acceptable credit strength and deemed by management to be competent and competitive market-makers, and we attempt to limit our exposure to non-performance by any single counterparty. As of June 30, 2025, our commodity contracts derivative instruments were spread among 20 counterparties.

Hedging Arrangements

Certain of our hedging arrangements are with counterparties that are also Lenders (or affiliates of Lenders) under our Credit Facility. We do not expect to post cash or letters of credit to secure our obligations under these hedging arrangements while we have our investment grade ratings. The obligations under these contracts must be secured by cash or letters of credit to the extent that any mark-to-market amounts exceed defined thresholds. As of June 30, 2025, we did not have any cash or letters of credit posted as collateral for our commodity derivatives.