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Derivatives and Fair Value | 12 Months Ended
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Dec. 31, 2021
Derivatives and Fair Value [Abstract] |
Derivatives and Fair Value | 10. DERIVATIVES AND FAIR VALUEThe Company uses derivative financial instruments from time to time to achieve a more predictable cash flow from crude oil production by reducing the exposure to price fluctuations. See Note 2 for further information.Commodity swaps - In June 2018, the Company entered into commodity swaps at a Dated Brent weighted average of $74.00 per barrel for the period from and including June 2018 through June 2019 for a quantity of approximately 400,000 barrels. On May 6, 2019, the Company entered into commodity swaps at a Dated Brent weighted average of $66.70 per barrel for the period from and including July 2019 through June 2020 for an approximate quantity of 500,000 barrels. As of December 31, 2020, the Company did not have any unexpired commodity swaps. On January 22, 2021, the Company entered into commodity swaps at a Dated Brent weighted average of $53.10 per barrel for the period from and including February 2021 through January 2022 for a quantity of 709,262 barrels. On May 6, 2021, the Company entered into commodity swaps at a Dated Brent weighted average price of $66.51 per barrel for the period from and including May 2021 through October 2021 for a quantity of 672,533 barrels. On August 6, 2021, the Company entered into additional commodity swaps at a Dated Brent weighted average price of $67.70 per barrel for the period from and including November 2021 through February 2022 for a quantity of 314,420 barrels. On September 24, 2021, the Company entered into additional commodity swaps at a Dated Brent weighted average price of $72.00 per barrel for the period from and including March 2022 to June 2022 for a quantity of 460,000 barrels. See the table below for the unexpired barrels as of December 31, 2021. Settlement Period Type of Contract Index Barrels Weighted Average PriceJanuary 2022 Swaps Dated Brent 60,794 $ 53.10January 2022 to February 2022 Swaps Dated Brent 191,060 $ 67.70March 2022 to June 2022 Swaps Dated Brent 460,000 $ 72.00 711,854 The following are the additional swaps entered into in 2022: Settlement Period Type of Contract Index Barrels Weighted Average PriceApril 2022 to June 2022 Swaps Dated Brent 234,000 $ 85.01July 2022 to September 2022 Swaps Dated Brent 375,000 $ 76.53 609,000 While these commodity swaps are intended to be an economic hedge to mitigate the impact of a decline in crude oil prices, the Company has not elected hedge accounting. The contracts are being measured at fair value each period, with changes in fair value recognized in net income. The Company does not enter into derivative instruments for speculative or trading proposes. The crude oil swaps are measured at fair value using the Income Method. Level 2 observable inputs used in the valuation model include market information as of the reporting date, such as prevailing Brent crude futures prices, Brent crude futures commodity price volatility and interest rates. The determination of the swaps’ fair value includes the impact of the counterparty’s non-performance risk. To mitigate counterparty risk, the Company enters into such derivative contracts with creditworthy financial institutions deemed by management as competent and competitive market makers.The following table sets forth the gain (loss) on derivative instruments on the Company’s consolidated statements of operations: Year Ended December 31,Derivative Item Statement of Operations Line 2021 2020 2019 (in thousands)Crude oil swaps Realized gain (loss) - contract settlements $ (18,020) $ 7,216 $ 2,439 Unrealized loss (4,806) (639) (2,885) Derivative instruments gain (loss), net $ (22,826) $ 6,577 $ (446)

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- Definition The entire disclosure for derivatives and fair value of assets and liabilities. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -URI http://asc.fasb.org/topic&trid=2155941 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
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