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Derivative Instruments | 6 Months Ended
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Jun. 30, 2026
Derivative Instruments |
Derivative Instruments | (11) Derivative Instruments The Company is exposed to certain risks relating to its ongoing business operations, and it may use derivative instruments to manage its commodity price risk. In addition, the Company periodically enters into contracts that contain embedded features that are required to be bifurcated and accounted for separately as derivatives.
(a) | Commodity Derivative Positions
The Company periodically enters into natural gas, NGLs and oil derivative contracts with counterparties to hedge the price risk associated with its production. These derivatives are not entered into for trading purposes. To the extent that changes occur in the market prices of natural gas, NGLs and oil, the Company is exposed to market risk on these open contracts. This market risk exposure is generally offset by the change in market prices of natural gas, NGLs and oil recognized upon the ultimate sale of the Company’s production. The Company was party to various commodity derivative contracts that settled during the three and six months ended June 30, 2025 and 2026. The Company enters into derivative contracts when management believes that favorable future sales prices for the Company’s production can be secured. The Company’s derivative contracts have not been designated as hedges for accounting purposes; therefore, all gains and losses are recognized in the Company’s unaudited condensed consolidated statements of operations and comprehensive income. Fixed Price Swaps As of June 30, 2026, the Company’s fixed price swap positions were as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | Weighted | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | Average | ​
Commodity / Settlement Period |  | Index |  | Contracted Volume |  | Price | ​ ​
Natural Gas | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
July-December 2026 | ​ | Henry Hub | ​ | 1,295,000 | MMBtu/day | ​ | ​ | 3.91 | /MMBtu | ​
July-December 2026 | ​ | TETCO M2 | ​ | 10,000 | MMBtu/day | ​ | ​ | 3.36 | /MMBtu | ​
January-December 2027 | ​ | Henry Hub | ​ | 915,329 | MMBtu/day | ​ | ​ | 3.88 | /MMBtu | ​
January-December 2027 | ​ | Dom South | ​ | 20,000 | MMBtu/day | ​ | ​ | 2.93 | /MMBtu | ​
January-December 2028 | ​ | Henry Hub | ​ | 174,973 | MMBtu/day | ​ | ​ | 3.78 | /MMBtu | ​
January-December 2028 | ​ | Dom South | ​ | 30,000 | MMBtu/day | ​ | ​ | 2.88 | /MMBtu | ​
January-December 2028 | ​ | TETCO M2 | ​ | 60,000 | MMBtu/day | ​ | ​ | 2.92 | /MMBtu | ​
​ Under the Company’s fixed price swap agreements, when actual commodity prices upon settlement exceed the fixed price provided by the contracts, the Company pays the difference to the counterparty. When actual commodity prices upon settlement are less than the contractually provided fixed price, the Company receives the difference from the counterparty. Basis Swaps ​ As of June 30, 2026, the Company’s basis swap positions were as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | Weighted Average | ​
Commodity / Settlement Period |  | Index to Basis Differential |  | Contracted Volume |  | Price | ​
Natural Gas | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
July-December 2026 | ​ | NYMEX to TETCO M2 | ​ | 430,000 | MMBtu/day | ​ | $ | (0.97) | /MMBtu | ​
July-December 2026 | ​ | NYMEX to Dom South | ​ | 220,000 | MMBtu/day | ​ | ​ | (0.98) | /MMBtu | ​
July-December 2026 | ​ | NYMEX to TCO | ​ | 100,000 | MMBtu/day | ​ | ​ | (0.83) | /MMBtu | ​
January-December 2027 | ​ | NYMEX to TETCO M2 | ​ | 302,959 | MMBtu/day | ​ | ​ | (0.93) | /MMBtu | ​
January-December 2027 | ​ | NYMEX to Dom South | ​ | 154,630 | MMBtu/day | ​ | ​ | (1.00) | /MMBtu | ​
January-December 2027 | ​ | NYMEX to TCO | ​ | 74,795 | MMBtu/day | ​ | ​ | (0.78) | /MMBtu | ​
January-December 2028 | ​ | NYMEX to TETCO M2 | ​ | 104,863 | MMBtu/day | ​ | ​ | (0.88) | /MMBtu | ​
January-December 2028 | ​ | NYMEX to Dom South | ​ | 54,973 | MMBtu/day | ​ | ​ | (0.95) | /MMBtu | ​
January-December 2028 | ​ | NYMEX to TCO | ​ | 29,945 | MMBtu/day | ​ | ​ | (0.81) | /MMBtu | ​
​ Under the Company’s basis swap contracts, when actual commodity prices upon settlement are lower than the fixed price provided by the contracts, the Company receives the difference from the counterparty. When actual commodity prices upon settlement are higher than the contractually provided fixed price, the Company pays the difference to the counterparty. Short Calls As of June 30, 2026, the Company’s short call contract positions were as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | Weighted | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | Average | ​
Commodity / Settlement Period |  | Index |  | Contracted Volume |  | Price | ​
Natural Gas | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
July-December 2026 | ​ | Henry Hub | ​ | 30,000 | MMBtu/day | ​ | $ | 7.25 | /MMBtu | ​
January-December 2027 | ​ | Henry Hub | ​ | 24,959 | MMBtu/day | ​ | ​ | 7.10 | /MMBtu | ​
​ Under the Company’s short call contracts, when actual commodity prices upon settlement exceed the fixed price provided by the contracts, the Company pays the difference to the counterparty. ​ Collars ​ As of June 30, 2026, the Company’s collar contract positions were as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | Weighted | ​ | Weighted | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | Average | ​ | Average | ​
Commodity / Settlement Period |  | Index |  | Contracted Volume |  | Ceiling Price |  | Floor Price | ​
Natural Gas | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
July-December 2026 (1) | ​ | Henry Hub | ​ | 587,000 | MMBtu/day | ​ | $ | 5.52 | /MMBtu | ​ | $ | 3.21 | /MMBtu | ​
January-December 2027 | ​ | Henry Hub | ​ | 57,425 | MMBtu/day | ​ | ​ | 4.62 | /MMBtu | ​ | ​ | 3.46 | /MMBtu | ​
(1) | Includes a call option and an embedded put option for 32,000 MMBtu/day at a strike price of $2.63/MMBtu tied to NYMEX pricing for the production volumes associated with the Company’s retained interest in the volumetric production payment transaction (“VPP”) properties. The Company bifurcated the embedded put option and reflects it at fair value in the unaudited condensed consolidated financial statements.
​ Under the Company’s collar agreements, when actual commodity prices upon settlement are below the floor price provided by the contract, the Company receives the difference from the counterparty. When actual commodity prices upon settlement are above the ceiling price, the Company pays the difference to the counterparty. Three-Way Collars As of June 30, 2026, the Company’s three-way collar contract positions were as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | Weighted | ​ | Weighted | ​ | Weighted | ​
​ | ​ | ​ | ​ | Contracted | ​ | Average | ​ | Average | ​ | Average | ​
Commodity / Settlement Period |  | Index |  | Volume |  | Ceiling Price |  | Floor Price | ​ ​ | Sub-Floor Price | ​
Natural Gas | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
July-December 2026 | ​ | Henry Hub | ​ | 20,000 | MMBtu/day | ​ | $ | 4.88 | /MMBtu | ​ | $ | 3.70 | /MMBtu | ​ | $ | 2.88 | /MMBtu | ​
January-December 2027 | ​ | Henry Hub | ​ | 22,466 | MMBtu/day | ​ | ​ | 4.68 | /MMBtu | ​ | ​ | 3.66 | /MMBtu | ​ | ​ | 2.55 | /MMBtu | ​
​ Under the Company’s three-way collar agreements, when actual commodity prices upon settlement are below the floor price provided by the contract, the Company receives the difference from the counterparty. When actual commodity prices upon settlement are above the ceiling price, the Company pays the difference to the counterparty. When actual commodity prices are below the sub-floor price, the Company pays the difference to the counterparty. ​ Martica ​ During the three months ended March 31, 2025, all of Martica’s derivative contracts expired, and therefore, after March 31, 2025, there were no derivative gains or losses attributable to Martica. Martica was deconsolidated from the condensed consolidated financial statements as of June 30, 2026. See Note 2—Summary of Significant Accounting Policies for additional information. ​
(b) | Summary
The table below presents a summary of the fair values of the Company’s derivative instruments and where such values are recorded in the condensed consolidated balance sheets (in thousands).
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | (Unaudited) | ​
​ | ​ | ​ | ​ | December 31, | ​ | June 30, | ​
​ | ​ ​ | Balance Sheet Location | ​ ​ | 2025 | ​ | 2026 | ​
Asset derivatives not designated as hedges for accounting purposes: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Commodity derivatives—current | ​ | Derivative instruments | ​ | $ | 68,054 | ​ | ​ | 180,648 | ​
Embedded derivatives—current | ​ | Derivative instruments | ​ | ​ | 859 | ​ | ​ | 200 | ​
Commodity derivatives—noncurrent | ​ | Derivative instruments | ​ | ​ | 12,524 | ​ | ​ | 50,767 | ​
Total asset derivatives (1) | ​ | ​ | ​ | ​ | 81,437 | ​ | ​ | 231,615 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Liability derivatives not designated as hedges for accounting purposes: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Commodity derivatives—current | ​ | Derivative instruments | ​ | ​ | — | ​ | ​ | 1,913 | ​
Commodity derivatives—noncurrent | ​ | Derivative instruments | ​ | ​ | — | ​ | ​ | 1,613 | ​
Total liability derivatives (1) | ​ | ​ | ​ | ​ | — | ​ | ​ | 3,526 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net derivatives asset (1) | ​ | ​ | ​ | $ | 81,437 | ​ | ​ | 228,089 | ​
(1) | The fair value of derivative instruments was determined using Level 2 inputs.
​ ​ The following table sets forth the gross values of recognized derivative assets and liabilities, the amounts offset under master netting arrangements with counterparties, and the resulting net amounts presented in the condensed consolidated balance sheets as of the dates presented, all at fair value (in thousands): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | (Unaudited) | ​
​ | ​ | December 31, 2025 | ​ | June 30, 2026 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Net Amounts of | ​
​ | ​ | Gross | ​ | Gross | ​ | Net Amounts of | ​ | Gross | ​ | Gross | ​ | Assets | ​
​ | ​ | Amounts | ​ | Amounts Offset | ​ | Assets on | ​ | Amounts | ​ | Amounts Offset | ​ | (Liabilities) on | ​
​ | ​ ​ | Recognized | ​ ​ | Recognized | ​ ​ | Balance Sheet | ​ ​ | Recognized | ​ ​ | Recognized | ​ ​ | Balance Sheet | ​
Commodity derivative assets | ​ | $ | 162,641 | ​ | ​ | (82,063) | ​ | ​ | 80,578 | ​ | ​ | 374,087 | ​ | ​ | (142,672) | ​ | ​ | 231,415 | ​
Embedded derivative assets | ​ | ​ | 859 | ​ | ​ | — | ​ | ​ | 859 | ​ | ​ | 200 | ​ | ​ | — | ​ | ​ | 200 | ​
Commodity derivative liabilities | ​ | ​ | (82,063) | ​ | ​ | 82,063 | ​ | ​ | — | ​ | ​ | (146,198) | ​ | ​ | 142,672 | ​ | ​ | (3,526) | ​
​ The following table sets forth a summary of derivative fair value gains and losses and where such values are recorded in the unaudited condensed consolidated statements of operations and comprehensive income (in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Statement of | ​ | Three Months Ended June 30, | ​ | Six Months Ended June 30, | ​
​ | ​ ​ | Operations Location | ​ | 2025 | ​ | 2026 | ​ | 2025 | ​ | 2026 | ​
Commodity derivative fair value gains (losses) (1) | ​ | Revenue | ​ | $ | 53,220 | ​ | ​ | 161,186 | ​ | ​ | (17,241) | ​ | ​ | 196,316 | ​
Embedded derivative fair value gains (losses) (1) | ​ | Revenue | ​ | ​ | 189 | ​ | ​ | (553) | ​ | ​ | (1,021) | ​ | ​ | (660) | ​
(1) | The fair value of derivative instruments was determined using Level 2 inputs.

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