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Derivative Financial Instruments and Hedging Activities
 12 Months Ended
Dec. 31, 2021
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments and Hedging Activities Derivative Financial Instruments and Hedging Activities
Comstock uses commodity price swaps, basis swaps and collars to hedge oil and natural gas prices to manage price risk. Swaps are settled monthly based on differences between the prices specified in the instruments and the settlement prices of futures contracts. Generally, when the applicable settlement price is less than the price specified in the contract, Comstock receives a settlement from the counterparty based on the difference multiplied by the volume or amounts hedged. Similarly, when the applicable settlement price exceeds the price specified in the contract, Comstock pays the counterparty based on the difference. Comstock generally receives a settlement from the counterparty for floors when the applicable settlement price is less than the price specified in the contract, which is based on the difference multiplied by the volumes hedged. For collars, generally Comstock receives a settlement from the counterparty when the settlement price is below the floor and pays a settlement to the counterparty when the settlement price exceeds the cap. No settlement occurs when the settlement price falls between the floor and cap.
All of the Company's derivative financial instruments are used for risk management purposes and, by policy, none are held for trading or speculative purposes. Comstock minimizes credit risk to counterparties of its derivative financial instruments through formal credit policies, monitoring procedures, and diversification. The Company is not required to provide any credit support to its counterparties other than cross collateralization with the assets securing its bank credit facility. None of the Company's derivative financial instruments involve payment or receipt of premiums. The Company classifies the fair value amounts of derivative financial instruments as net current or noncurrent assets or liabilities, whichever the case may be, by commodity contract. None of the Company's derivative contracts are designated as cash flow hedges. The Company recognizes cash settlements and changes in the fair value of its derivative financial instruments as a single component of other income
(expenses) in the consolidated statements of operations and as separate components within cash flows from operating activities in the consolidated statements of cash flows.
All of Comstock's natural gas derivative financial instruments are tied to the Henry Hub-NYMEX price index and all of its oil derivative financial instruments have been tied to the WTI-NYMEX index price.
The Company had the following outstanding natural gas price derivative financial instruments at December 31, 2021:
Future Production Period Ending December 31,
20222023Total
Natural Gas Swap Contracts:
Volume (MMBtu)121,300,000 — 121,300,000 
Average Price per MMBtu$2.67 $2.67 
Natural Gas Collar Contracts:
Volume (MMBtu)140,925,000 6,750,000 147,675,000 
Price per MMBtu:
Average Ceiling$3.91 $4.03 $3.92 
Average Floor$2.62 $2.67 $2.63 
Natural Gas Basis Swap Contracts:
Volume (MMBtu)10,950,000 
(1)
— 10,950,000 
Average Price per MMBtu($0.16)
(1)
($0.16)
_______________
(1)Contracts fix the differentials between NYMEX Henry Hub and the Columbia Gulf Mainline indices.
The aggregate fair value of the Company's derivative financial instruments are presented on a gross basis in the accompanying consolidated balance sheets. The classification of derivative financial instruments between assets and liabilities, consists of the following:
As of December 31,
TypeConsolidated Balance Sheet Location20212020
(in thousands)
Asset Derivative Financial Instruments:
Natural gas price derivativesDerivative Financial Instruments  – current$4,528 $8,913 
Oil price derivativesDerivative Financial Instruments  – current730 — 
$5,258 $8,913 
Natural gas price derivativesDerivative Financial Instruments  – long-term$— $661 
Liability Derivative Financial Instruments:
Natural gas price derivativesDerivative Financial Instruments  – current$181,215 $45,158 
Oil price derivatives Derivative Financial Instruments  – current730 831 
Interest rate derivativesDerivative Financial Instruments  – current— 1,016 
$181,945 $47,005 
Natural gas price derivativesDerivative Financial Instruments  – long-term$4,042 $1,308 
Interest rate derivativesDerivative Financial Instruments  – long-term— 1,056 
$4,042 $2,364 
Gains and losses related to the change in the fair value of the Company's derivative contracts recognized in the consolidated statement of operations were as follows:
Year Ended December 31,
Gain/(Loss) Recognized in Earnings on Derivatives202120202019
(In thousands)
Natural gas price derivatives$(555,636)$353 $60,694 
Oil price derivatives(7,247)12,059 (8,959)
Interest rate derivatives2,235 (2,461)— 
$(560,648)$9,951 $51,735