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Derivative Activities | 6 Months Ended
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Jun. 30, 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 oil or Mont Belvieu for NGLs, approximated a net gain of $241.7 million at June 30, 2024. These contracts expire monthly through December 2027. The following table sets forth our commodity-based derivative volumes by year as of June 30, 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 |  | 300,000 Mmbtu/day |  | $ |  | 4.11 |  |  |  |  |  |  |  |  |  |  |  |  |
2024 |  | Collars |  | 433,424 Mmbtu/day |  |  |  |  |  |  |  |  |  | $ |  | 3.51 |  |  | $ |  | 5.66 |
2024 |  | Three-way Collars |  | 91,576 Mmbtu/day |  |  |  |  |  | $ |  | 2.58 |  |  | $ |  | 3.40 |  |  | $ |  | 4.31 |
2025 |  | Swaps |  | 400,000 Mmbtu/day |  | $ |  | 4.12 |  |  |  |  |  |  |  |  |  |  |  |  |
2025 |  | Three-way Collars |  | 138,959 Mmbtu/day |  |  |  |  |  | $ |  | 2.52 |  |  | $ |  | 3.33 |  |  | $ |  | 4.93 |
2026 |  | Swaps |  | 100,000 Mmbtu/day |  | $ |  | 4.11 |  |  |  |  |  |  |  |  |  |  |  |  |
2027 |  | Swaps |  | 30,000 Mmbtu/day |  | $ |  | 4.10 |  |  |  |  |  |  |  |  |  |  |  |  |
Oil (b) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
2024 |  | Swaps |  | 5,250 bbls/day |  | $ |  | 80.90 |  |  |  |  |  |  |  |  |  |  |  |  |
July - September 2024 |  | Collars |  | 500 bbls/day |  |  |  |  |  |  |  |  |  | $ |  | 80.00 |  |  | $ |  | 90.00 |
NGLs (C3-Propane) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
2024 |  | Swaps |  | 6,500 bbls/day |  | $ |  | 33.63 |  |  |  |  |  |  |  |  |  |  |  |  |
(a) | We also sold natural gas swaptions of 40,000 Mmbtu/day for calendar year 2026 at a weighted average price of $4.08/Mmbtu that expire through October 2024 and 30,000 Mmbtu/day for calendar year 2027 at a weighted price of $4.10/Mmbtu that expire in October 2024.
(b) | We also sold oil swaptions of 2,000 bbls/day for calendar year 2025 at a weighted average price of $80.00/bbl that expire in 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 June 30, 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 289,875,000 Mmbtu. The fair value of these contracts was a gain of $13.9 million at June 30, 2024. Derivative Assets and Liabilities The combined fair value of derivatives included in the accompanying consolidated balance sheets as of June 30, 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):
| June 30, 2024 |  |  | December 31, 2023 |  |
Derivative assets: |  |  |  |  |  |
Gross amounts of recognized assets | $ | 274,593 |  |  | $ | 452,378 |  |
Gross amounts offset in the consolidated balance sheets |  | (13,196 | ) |  |  | (9,407 | ) |
Net amounts of assets presented in the consolidated balance sheets | $ | 261,397 |  |  | $ | 442,971 |  |
| June 30, 2024 |  |  | December 31, 2023 |
Derivative (liabilities): |  |  |  |  |
Gross amounts of recognized (liabilities) | $ | (18,974 | ) |  | $ | (9,736 | )
Gross amounts offset in the consolidated balance sheets |  | 13,196 |  |  |  | 9,407 |
Net amounts of (liabilities) presented in the consolidated balance sheets | $ | (5,778 | ) |  | $ | (329 | )
Derivative Fair Value Income The effects of our derivatives on our consolidated statements of income are summarized below (in thousands):
| Three Months Ended June 30, |  |  | Six Months Ended June 30, |
| 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Commodity swaps | $ | (680 | ) |  | $ | 43,067 |  |  | $ | 31,961 |  |  | $ | 252,159 |
Swaptions |  | 192 |  |  |  | (2,492 | ) |  |  | (867 | ) |  |  | (2,492 | )
Three-way collars |  | 2,260 |  |  |  | 5,399 |  |  |  | 8,743 |  |  |  | 56,214 |
Collars |  | (16,084 | ) |  |  | 11,787 |  |  |  | 25,887 |  |  |  | 172,358 |
Basis swaps |  | 31,120 |  |  |  | 66,993 |  |  |  | (2,318 | ) |  |  | 18,402 |
Divestiture contingent consideration |  | — |  |  |  | (1,020 | ) |  |  | — |  |  |  | (4,940 | )
Total derivative fair value income | $ | 16,808 |  |  | $ | 123,734 |  |  | $ | 63,406 |  |  | $ | 491,701 |

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- 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
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