XML 26 R14.htm IDEA: XBRL DOCUMENT
v3.24.3

Derivative Instruments | 9 Months Ended
--- | ---
Sep. 30, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments | Note 7—Derivative Instruments The Company is exposed to certain risks relating to its ongoing business operations and may use derivative instruments to manage its exposure to commodity price risk from time to time. Commodity Derivative Contracts Historically, prices received for crude oil and natural gas production have been volatile because of supply and demand factors, worldwide political factors, general economic conditions and seasonal weather patterns. The Company may periodically use derivative instruments, such as swaps, costless collars and basis swaps, to mitigate its exposure to declines in commodity prices and to the corresponding negative impacts such declines can have on its cash flows from operations, returns on capital and other financial results. While the use of these instruments limits the downside risk of adverse price changes, their use may also limit future revenues from favorable price changes. The Company does not enter into derivative contracts for speculative or trading purposes. Commodity Swaps, Collar Contracts and Deferred Premium Puts. The Company may use commodity derivative instruments known as fixed price swaps to realize a known price for a specific volume of production, basis swaps to hedge the difference between the index price and a local or future index price, costless collars to establish fixed price floors and ceilings, or deferred premium puts to establish fixed price floors while delaying the premium payment until the option’s expiration. All transactions are settled in cash with one party paying the other for the resulting difference in price multiplied by the contract volume. The following table summarizes the approximate volumes and average contract prices of derivative contracts the Company had in place as of September 30, 2024:
| Period |  | Volume (Bbls) |  | Volume (Bbls/d) |  | Wtd. Avg. Crude Price ($/Bbl)(1)
Crude oil swaps | October 2024 - December 2024 |  | 3,772,000 |  |  | 41,000 |  |  | $75.08
| January 2025 - March 2025 |  | 3,870,000 |  |  | 43,000 |  |  | 75.15
| April 2025 - June 2025 |  | 3,913,000 |  |  | 43,000 |  |  | 73.85
| July 2025 - September 2025 |  | 3,956,000 |  |  | 43,000 |  |  | 72.65
| October 2025 - December 2025 |  | 3,956,000 |  |  | 43,000 |  |  | 71.62
| January 2026 - March 2026 |  | 1,575,000 |  |  | 17,500 |  |  | 71.49
| April 2026 - June 2026 |  | 1,592,500 |  |  | 17,500 |  |  | 70.61
| July 2026 - September 2026 |  | 1,610,000 |  |  | 17,500 |  |  | 69.77
| October 2026 - December 2026 |  | 1,610,000 |  |  | 17,500 |  |  | 69.08
| Period |  | Volume (Bbls) |  | Volume (Bbls/d) |  | Wtd. Avg. Collar Price Ranges ($/Bbl)(2)
Crude oil collars | October 2024 - December 2024 |  | 184,000 |  |  | 2,000 |  |  | $60.00 | - | $76.01
| Period |  | Volume (Bbls) |  | Volume (Bbls/d) |  | Wtd. Avg. Put Price ($/Bbl)(3) |  | Deferred Premium ($/Bbl)(3)
Deferred premium puts | October 2024 - December 2024 |  | 230,000 |  |  | 2,500 |  |  | $65.00 |  | $4.96
| Period |  | Volume (Bbls) |  | Volume (Bbls/d) |  | Wtd. Avg. Differential ($/Bbl)(4)
Crude oil basis differential swaps | October 2024 - December 2024 |  | 4,186,000 |  |  | 45,500 |  |  | $0.97
| January 2025 - March 2025 |  | 3,870,000 |  |  | 43,000 |  |  | 1.11
| April 2025 - June 2025 |  | 3,913,000 |  |  | 43,000 |  |  | 1.11
| July 2025 - September 2025 |  | 3,956,000 |  |  | 43,000 |  |  | 1.11
| October 2025 - December 2025 |  | 3,956,000 |  |  | 43,000 |  |  | 1.11
| January 2026 - March 2026 |  | 1,575,000 |  |  | 17,500 |  |  | 1.15
| April 2026 - June 2026 |  | 1,592,500 |  |  | 17,500 |  |  | 1.15
| July 2026 - September 2026 |  | 1,610,000 |  |  | 17,500 |  |  | 1.15
| October 2026 - December 2026 |  | 1,610,000 |  |  | 17,500 |  |  | 1.15
| Period |  | Volume (Bbls) |  | Volume (Bbls/d) |  | Wtd. Avg. Differential ($/Bbl)(5)
Crude oil roll differential swaps | October 2024 - December 2024 |  | 4,186,000 |  |  | 45,500 |  |  | $0.55
| January 2025 - March 2025 |  | 3,870,000 |  |  | 43,000 |  |  | 0.42
| April 2025 - June 2025 |  | 3,913,000 |  |  | 43,000 |  |  | 0.42
| July 2025 - September 2025 |  | 3,956,000 |  |  | 43,000 |  |  | 0.42
| October 2025 - December 2025 |  | 3,956,000 |  |  | 43,000 |  |  | 0.42
| January 2026 - March 2026 |  | 1,575,000 |  |  | 17,500 |  |  | 0.28
| April 2026 - June 2026 |  | 1,592,500 |  |  | 17,500 |  |  | 0.28
| July 2026 - September 2026 |  | 1,610,000 |  |  | 17,500 |  |  | 0.28
| October 2026 - December 2026 |  | 1,610,000 |  |  | 17,500 |  |  | 0.28
(1) These crude oil swap transactions are settled based on the NYMEX WTI index price on each trading day within the specified monthly settlement period versus the contractual swap price for the volumes stipulated. (2) These crude oil collars are settled based on the NYMEX WTI index price on each trading day within the specified monthly settlement period versus the contractual floor and ceiling prices for the volumes stipulated. (3) These crude oil deferred premium puts are settled based on the NYMEX WTI index price on each trading day within the specified monthly settlement period versus the contractual put prices for the volumes stipulated. (4) These crude oil basis swap transactions are settled based on the difference between the arithmetic average of ARGUS MIDLAND WTI and ARGUS WTI CUSHING indices, during each applicable monthly settlement period. (5) These crude oil roll swap transactions are settled based on the difference between the arithmetic average of NYMEX WTI calendar month prices and the physical crude oil delivery month price.
| Period |  | Volume (MMBtu) |  | Volume (MMBtu/d) |  | Wtd. Avg. Gas Price ($/MMBtu)(1)
Natural gas swaps | October 2024 - December 2024 |  | 5,933,899 |  |  | 64,499 |  |  | $3.86
| January 2025 - March 2025 |  | 3,600,000 |  |  | 40,000 |  |  | 4.32
| April 2025 - June 2025 |  | 3,640,000 |  |  | 40,000 |  |  | 3.65
| July 2025 - September 2025 |  | 3,680,000 |  |  | 40,000 |  |  | 3.83
| October 2025 - December 2025 |  | 3,680,000 |  |  | 40,000 |  |  | 4.20
| January 2026 - March 2026 |  | 990,000 |  |  | 11,000 |  |  | 4.18
| April 2026 - June 2026 |  | 1,001,000 |  |  | 11,000 |  |  | 3.48
| July 2026 - September 2026 |  | 1,012,000 |  |  | 11,000 |  |  | 3.80
| October 2026 - December 2026 |  | 1,012,000 |  |  | 11,000 |  |  | 4.21
| Period |  | Volume (MMBtu) |  | Volume (MMBtu/d) |  | Wtd. Avg. Differential ($/MMBtu)(2)
Natural gas basis differential swaps | October 2024 - December 2024 |  | 11,040,000 |  |  | 120,000 |  |  | $(0.98)
| January 2025 - March 2025 |  | 3,600,000 |  |  | 40,000 |  |  | (0.74)
| April 2025 - June 2025 |  | 3,640,000 |  |  | 40,000 |  |  | (0.74)
| July 2025 - September 2025 |  | 3,680,000 |  |  | 40,000 |  |  | (0.74)
| October 2025 - December 2025 |  | 3,680,000 |  |  | 40,000 |  |  | (0.74)
| January 2026 - March 2026 |  | 990,000 |  |  | 11,000 |  |  | (0.61)
| April 2026 - June 2026 |  | 1,001,000 |  |  | 11,000 |  |  | (1.67)
| July 2026 - September 2026 |  | 1,012,000 |  |  | 11,000 |  |  | (1.17)
| October 2026 - December 2026 |  | 1,012,000 |  |  | 11,000 |  |  | (1.02)
| Period |  | Volume (MMBtu) |  | Volume (MMBtu/d) |  | Wtd. Avg. Collar Price Ranges ($/MMBtu)(3)
Natural gas collars | October 2024 - December 2024 |  | 5,106,101 |  |  | 55,501 |  |  | $2.75 | - | $5.29
(1) These natural gas swap contracts are settled based on the NYMEX Henry Hub price on each trading day within the specified monthly settlement period versus the contractual swap price for the volumes stipulated. (2) These natural gas basis swap contracts are settled based on the difference between the Inside FERC’s West Texas WAHA price and the NYMEX price of natural gas, during each applicable monthly settlement period. (3) These natural gas collars are settled based on the NYMEX Henry Hub price on each trading day within the specified monthly settlement period versus the contractual floor and ceiling prices for the volumes stipulated. Derivative Instrument Reporting. The Company’s oil and natural gas derivative instruments have not been designated as hedges for accounting purposes. Therefore, all gains and losses are recognized in the Company’s consolidated statements of operations. All derivative instruments are recorded at fair value in the consolidated balance sheets, other than derivative instruments that meet the “normal purchase normal sale” exclusion, and any fair value gains and losses are recognized in current period earnings. The following table presents the impact of the Company’s derivative instruments in its consolidated statements of operations for the periods presented:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
(in thousands) | 2024 |  | 2023 |  | 2024 |  | 2023
Net gain (loss) on derivative instruments | $ | 238,533 |  |  | $ | (151,781) |  |  | $ | 131,702 |  |  | $ | (76,668) |
Offsetting of Derivative Assets and Liabilities. The Company’s commodity derivatives are included in the accompanying consolidated balance sheets as derivative assets and liabilities. The Company nets its financial derivative instrument fair value amounts executed with the same counterparty pursuant to ISDA master netting agreements, which provide for net settlement over the term of the contract and in the event of default or termination of the contract. The tables below summarize the fair value amounts and the classification in the consolidated balance sheets of the Company’s derivative contracts outstanding at the respective balance dates, as well as the gross recognized derivative assets, liabilities and offset amounts:
| Balance Sheet Classification |  | Gross Fair Value Asset/Liability Amounts |  | Gross Amounts Offset(1) |  | Net Recognized Fair Value Assets/Liabilities
(in thousands) |  |  | September 30, 2024
Derivative Assets |  |  |  |  |  |  |
Commodity contracts | Derivative instruments |  | $ | 134,106 |  |  | $ | (3,936) |  |  | $ | 130,170 |
| Other noncurrent assets |  | 55,088 |  |  | (323) |  |  | 54,765 |
Derivative Liabilities |  |  |  |  |  |  |
Commodity contracts | Other current liabilities |  | $ | 3,936 |  |  | $ | (3,936) |  |  | $ | — |
| Other noncurrent liabilities |  | 323 |  |  | (323) |  |  | — |
|  |  | December 31, 2023
Derivative Assets |  |  |  |  |  |  |
Commodity contracts | Derivative instruments |  | $ | 88,192 |  |  | $ | (17,601) |  |  | $ | 70,591 |
| Other noncurrent assets |  | 29,469 |  |  | (2,435) |  |  | 27,034 |
Derivative Liabilities |  |  |  |  |  |  |
Commodity contracts | Other current liabilities |  | $ | 20,326 |  |  | $ | (17,601) |  |  | $ | 2,725 |
| Other noncurrent liabilities |  | 3,762 |  |  | (2,435) |  |  | 1,327 |
(1) The Company has agreements in place with each of its counterparties that allow for the financial right of offset for derivative assets against derivative liabilities at settlement or in the event of a default under the agreements or if contracts are terminated. Contingent Features in Financial Derivative Instruments. None of the Company’s derivative instruments contain credit-risk-related contingent features. Counterparties to the Company’s financial derivative contracts are high credit-quality financial institutions that are primarily lenders under OpCo’s Credit Agreement. The Company enters into new hedge arrangements only with participants under its Credit Agreement, since these institutions are secured equally with the holders of any OpCo bank debt, which eliminates the potential need to post collateral when the Company is in a derivative liability position. As a result, the Company is not required to post letters of credit or corporate guarantees for its derivative counterparties in order to secure contract performance obligations. In addition, the Company is exposed to credit risk associated with its derivative contracts from non-performance by its counterparties. The Company mitigates its exposure to any single counterparty by contracting with a number of financial institutions, each of which has a high credit rating and is a lender under OpCo’s Credit Agreement as referenced above.

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480237/815-40-50-5 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 5C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-5C Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/815/tableOfContent + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration