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Derivative Activities | 12 Months Ended
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Dec. 31, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Activities | (8) Derivative Activities We use commodity-based derivative contracts to manage exposure to commodity price fluctuations. We do not enter into these arrangements for speculative or trading purposes. We do not utilize complex derivatives as we typically utilize commodity swaps or collar contracts to (1) reduce the effect of price volatility of the commodities we produce and sell and (2) support our annual capital budget and expenditure plans. Every derivative instrument is required to be recorded on our consolidated balance sheets as either an asset or a liability measured at its fair value. Their fair value, which is represented by the estimated amount that would be realized upon termination, based on a comparison of the contract price and a reference price (generally NYMEX for natural gas and crude oil), approximated a net derivative asset of $424.4 million at December 31, 2023. These contracts expire monthly through December 2026. The following table sets forth the derivative volumes by year as of December 31, 2023, excluding our basis swaps which are discussed separately below:
Period |  | Contract Type |  | Volume Hedged |  | Weighted Average Hedge Price |
|  |  |  |  |  | Swap |  |  | Sold Put |  |  | Floor |  |  | Ceiling |
Natural Gas (a) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
2024 |  | Swaps |  | 304,973 Mmbtu/day |  | $ | 4.01 |  |  |  |  |  |  |  |  |  |
2024 |  | Collars |  | 436,694 Mmbtu/day |  |  |  |  |  |  |  | $ | 3.50 |  |  | $ | 5.63 |
2024 |  | Three-way Collars |  | 93,511 Mmbtu/day |  |  |  |  | $ | 2.50 |  |  | $ | 3.40 |  |  | $ | 4.15 |
2025 |  | Swaps |  | 400,000 Mmbtu/day |  | $ | 4.12 |  |  |  |  |  |  |  |  |  |
2025 |  | Three-way Collars |  | 30,000 Mmbtu/day |  |  |  |  | $ | 2.70 |  |  | $ | 4.00 |  |  | $ | 5.00 |
2026 |  | Swaps |  | 60,000 Mmbtu/day |  | $ | 4.15 |  |  |  |  |  |  |  |  |  |
Crude Oil |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
January-September 2024 |  | Swaps |  | 4,000 bbls/day |  | $ | 80.25 |  |  |  |  |  |  |  |  |  |
January-September 2024 |  | Collars |  | 832 bbls/day |  |  |  |  |  |  |  | $ | 80.00 |  |  | $ | 90.12 |
(a) | We also sold natural gas swaptions of 40,000 Mmbtu/day for calendar year 2026 at a weighted average price of $4.11/Mmbtu that expire June 2024.
Basis Swap Contracts In addition to the commodity derivatives described above, at December 31, 2023, we had natural gas basis swap contracts which lock in the differential between NYMEX and certain of our physical pricing points in Appalachia. These contracts settle monthly through December 2026 and include a total volume of 313,453,000 Mmbtu. The fair value of these contracts was a net derivative asset of $18.3 million on December 31, 2023. Derivative Assets and Liabilities The combined fair value of derivatives included in the accompanying consolidated balance sheets as of December 31, 2023 and 2022 is summarized below (in thousands). As of December 31, 2023, we are conducting derivative activities with fourteen counterparties, of which all but six are secured lenders in our bank credit facility. We believe all of these counterparties are acceptable credit risks. At times, such risks may be concentrated with certain counterparties. The credit worthiness of our counterparties is subject to periodic review. The assets and liabilities are netted where derivatives with both gain and loss positions are held by a single counterparty and we have master netting arrangements.
|  |  |  | December 31, 2023 |
|  |  |  | Gross Amounts of Recognized Assets |  |  | Gross Amounts Offset in the Balance Sheet |  |  | Net Amounts of Assets Presented in the Balance Sheet |
Derivative assets: |  |  |  |  |  |  |  |  |
Natural gas |  | –swaps |  | $ | 238,465 |  |  | $ | — |  |  | $ | 238,465 |
|  | –swaptions |  |  | — |  |  |  | (1,161 | ) |  |  | (1,161 | )
|  | –collars |  |  | 150,456 |  |  |  | — |  |  |  | 150,456 |
|  | –three-way collars |  |  | 25,406 |  |  |  | — |  |  |  | 25,406 |
|  | –basis swaps |  |  | 26,852 |  |  |  | (8,246 | ) |  |  | 18,606 |
Crude oil |  | –swaps |  |  | 9,115 |  |  |  | — |  |  |  | 9,115 |
|  | –collars |  |  | 2,084 |  |  |  | — |  |  |  | 2,084 |
|  |  |  | $ | 452,378 |  |  | $ | (9,407 | ) |  | $ | 442,971 |
|  |  |  | December 31, 2023 |
|  |  |  | Gross Amounts of Recognized (Liabilities) |  |  | Gross Amounts Offset in the Balance Sheet |  |  | Net Amounts of (Liabilities) Presented in the Balance Sheet |
Derivative (liabilities): |  |  |  |  |  |  |  |  |
Natural gas |  | –swaptions |  | $ | (1,161 | ) |  | $ | 1,161 |  |  | $ | — |
|  | –basis swaps |  |  | (8,575 | ) |  |  | 8,246 |  |  |  | (329 | )
|  |  |  | $ | (9,736 | ) |  | $ | 9,407 |  |  | $ | (329 | )
|  |  |  | December 31, 2022 |
|  |  |  | Gross Amounts of Recognized Assets |  |  | Gross Amounts Offset in the Balance Sheet |  |  | Net Amounts of Assets Presented in the Balance Sheet |
Derivative assets: |  |  |  |  |  |  |  |  |
Natural gas |  | –swaps |  | $ | 19,438 |  |  | $ | (6,236 | ) |  | $ | 13,202 |
|  | –collars |  |  | 54,222 |  |  |  | (45,452 | ) |  |  | 8,770 |
|  | –three-way collars |  |  | 12,424 |  |  |  | (12,424 | ) |  |  | — |
|  | –basis swaps |  |  | 25,493 |  |  |  | (20,437 | ) |  |  | 5,056 |
Crude oil |  | –collars |  |  | 1,807 |  |  |  | — |  |  |  | 1,807 |
Divestiture contingent consideration |  |  | 13,080 |  |  |  | — |  |  |  | 13,080 |
|  |  |  | $ | 126,464 |  |  | $ | (84,549 | ) |  | $ | 41,915 |
|  |  |  | December 31, 2022 |
|  |  |  | Gross Amounts of Recognized (Liabilities) |  |  | Gross Amounts Offset in the Balance Sheet |  |  | Net Amounts of (Liabilities) Presented in the Balance Sheet |
Derivative (liabilities): |  |  |  |  |  |  |  |  |
Natural gas |  | –swaps |  | $ | (115,374 | ) |  | $ | 6,236 |  |  | $ | (109,138 | )
|  | –collars |  |  | (72,866 | ) |  |  | 45,452 |  |  |  | (27,414 | )
|  | –three-way collars |  |  | (24,341 | ) |  |  | 12,424 |  |  |  | (11,917 | )
|  | –basis swaps |  |  | (24,972 | ) |  |  | 20,437 |  |  |  | (4,535 | )
Crude oil |  | –swaps |  |  | (13,908 | ) |  |  | — |  |  |  | (13,908 | )
|  |  |  | $ | (251,461 | ) |  | $ | 84,549 |  |  | $ | (166,912 | )
The effects of our derivatives on our consolidated statements of income for the last three years are summarized below (in thousands).
|  | Year Ended December 31, |
Derivative Fair Value Income (Loss) |  | 2023 |  |  | 2022 |  |  | 2021 |
Commodity swaps |  | $ | 434,836 |  |  | $ | (713,122 | ) |  | $ | (466,203 | )
Swaptions |  |  | (1,161 | ) |  |  | 11,149 |  |  |  | (1,346 | )
Collars |  |  | 260,630 |  |  |  | (302,364 | ) |  |  | (117,612 | )
Three-way collars |  |  | 88,096 |  |  |  | (235,335 | ) |  |  | (137,443 | )
Basis swaps |  |  | 43,833 |  |  |  | 41,622 |  |  |  | 33,691 |
Calls |  |  | — |  |  |  | (1,363 | ) |  |  | (836 | )
Freight swaps |  |  | — |  |  |  | (33 | ) |  |  | (647 | )
Divestiture contingent consideration |  |  | (5,080 | ) |  |  | 10,940 |  |  |  | 40,180 |
Total |  | $ | 821,154 |  |  | $ | (1,188,506 | ) |  | $ | (650,216 | )

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