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Derivative Activities | 3 Months Ended
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Mar. 31, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Activities | (10) 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 utilize commodity swaps, collars, three-way collars or swaptions to (1) reduce the effect of price volatility of the commodities we produce and sell and (2) support our annual capital budget, fixed costs and investment plans. The fair value of our derivative contracts, represented by the estimated amount that would be realized upon termination, based on a comparison of the contract price and a reference price, generally the New York Mercantile Exchange (NYMEX) for natural gas and crude oil or Mont Belvieu for NGLs, approximated a net gain of $393.9 million at March 31, 2024. These contracts expire monthly through December 2026. The following table sets forth our commodity-based derivative volumes by year as of March 31, 2024, 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 |  | 263,818 Mmbtu/day |  | $ |  | 4.20 |  |  |  |  |  |  |  |  |  |  |  |
2024 |  | Collars |  | 438,909 Mmbtu/day |  |  |  |  |  |  |  |  | $ |  | 3.52 |  |  | $ |  | 5.67 |
2024 |  | Three-way Collars |  | 78,955 Mmbtu/day |  |  |  |  | $ |  | 2.50 |  |  | $ |  | 3.42 |  |  | $ |  | 4.17 |
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 (b) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
2024 |  | Swaps |  | 4,607 bbls/day |  | $ |  | 80.61 |  |  |  |  |  |  |  |  |  |  |  |
April - September 2024 |  | Collars |  | 500 bbls/day |  |  |  |  |  |  |  |  | $ |  | 80.00 |  |  | $ |  | 90.00 |
NGLs (C3-Propane) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
2024 |  | Swaps |  | 6,767 bbls/day |  | $ |  | 33.58 |  |  |  |  |  |  |  |  |  |  |  |
(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.
(b) | We also sold crude oil swaptions of 2,500 bbls/day for calendar year 2025 at a weighted average price of $80.00/bbl that expire through September 2024.
Every derivative instrument is required to be recorded on the balance sheet as either an asset or a liability measured at its fair value. We recognize all changes in fair value of these derivatives as earnings in derivative fair value income or loss in the periods in which they occur. Basis Swap Contracts In addition to the commodity derivatives described above, at March 31, 2024, we had natural gas basis swap contracts which lock in the differential between NYMEX Henry Hub and certain of our physical pricing indices. These contracts settle through December 2028 and include a total volume of 323,405,000 Mmbtu. The fair value of these contracts was a loss of $27.0 million at March 31, 2024. Derivative Assets and Liabilities The combined fair value of derivatives included in the accompanying consolidated balance sheets as of March 31, 2024 and December 31, 2023 is summarized below. 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. The tables below provide additional information relating to our master netting arrangements with our derivative counterparties (in thousands):
| March 31, 2024 |  |  | December 31, 2023 |  |
Derivative assets: |  |  |  |  |  |
Gross amounts of recognized assets | $ | 406,393 |  |  | $ | 452,378 |  |
Gross amounts offset in the consolidated balance sheets |  | (28,313 | ) |  |  | (9,407 | ) |
Net amounts of assets presented in the consolidated balance sheets | $ | 378,080 |  |  | $ | 442,971 |  |
| March 31, 2024 |  |  | December 31, 2023 |
Derivative (liabilities): |  |  |  |  |
Gross amounts of recognized (liabilities) | $ | (39,527 | ) |  | $ | (9,736 | )
Gross amounts offset in the consolidated balance sheets |  | 28,313 |  |  |  | 9,407 |
Net amounts of (liabilities) presented in the consolidated balance sheets | $ | (11,214 | ) |  | $ | (329 | )
The effects of our derivatives on our consolidated statements of income are summarized below (in thousands):
| Three Months Ended March 31, |
| 2024 |  |  | 2023 |
Derivative Fair Value Income |  |  |  |  |
Commodity swaps | $ | 32,642 |  |  | $ | 209,092 |
Swaptions |  | (1,059 | ) |  |  | — |
Three-way collars |  | 6,483 |  |  |  | 50,814 |
Collars |  | 41,971 |  |  |  | 160,571 |
Basis swaps |  | (33,439 | ) |  |  | (48,590 | )
Divestiture contingent consideration |  | — |  |  |  | (3,920 | )
Total derivative fair value income | $ | 46,598 |  |  | $ | 367,967 |

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