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Fair Value Measurements
 9 Months Ended
Sep. 30, 2025
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
In accordance with the FASB’s authoritative guidance on fair value measurements, certain of the Company’s financial assets and liabilities are measured at fair value on a recurring basis. The Company’s financial instruments, including certain cash and cash equivalents, accounts receivable, accounts payable and other payables, are carried at cost, which approximates their respective fair market values due to their short-term maturities. The Company recognizes its non-financial assets and liabilities, such as ARO and properties acquired in a business combination or upon impairment, at fair value on a non-recurring basis.
Financial Assets and Liabilities
Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.
The following tables set forth by level, within the fair value hierarchy, the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis:
Fair value at September 30, 2025
Level 1Level 2Level 3Total
(In thousands)
Assets:
Commodity derivative contracts (see Note 6)
$— $66,502 $— $66,502 
Contingent consideration (see Note 6)
— 24,640 — 24,640 
Investment in unconsolidated affiliate (see Note 9)
124,562 — — 124,562 
Total assets$124,562 $91,142 $— $215,704 
Liabilities:
Commodity derivative contracts (see Note 6)
$— $1,094 $— $1,094 
Total liabilities$— $1,094 $— $1,094 

 Fair value at December 31, 2024
 Level 1Level 2Level 3Total
 (In thousands)
Assets:
Commodity derivative contracts (see Note 6)
$— $18,793 $— $18,793 
Contingent consideration (see Note 6)
— 22,780 — 22,780 
Investment in unconsolidated affiliate (see Note 9)
142,201 — — 142,201 
Total assets$142,201 $41,573 $— $183,774 
Liabilities:
Commodity derivative contracts (see Note 6)
$— $2,246 $— $2,246 
Total liabilities$— $2,246 $— $2,246 
Commodity derivative contracts. The Company enters into commodity derivative contracts to manage risks related to changes in crude oil and natural gas prices. The Company’s swaps and collars are valued by a third-party preparer based on an income approach. The significant inputs used are commodity prices, discount rate and the contract terms of the derivative instruments. These assumptions are observable in the marketplace throughout the full term of the contract, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace and are therefore designated as Level 2 within the fair value hierarchy. The Company records an adjustment to the fair value of its net derivative assets and liabilities for the counterparty nonperformance risk related to these contracts, and these adjustments were not material for the periods presented. See Note 6—Derivative Instruments for additional information.
Contingent consideration. In connection with the 2021 divestiture of certain oil and gas properties, the Company is entitled to receive up to three earn-out payments of $25.0 million per year for each of 2023, 2024 and 2025 if the average daily settlement price of NYMEX WTI exceeds $60 per barrel for such year (the “Contingent Consideration”). The fair value of the Contingent Consideration is determined by a third-party preparer using a Monte Carlo simulation model and Ornstein-Uhlenbeck pricing process. The significant inputs used are NYMEX WTI forward price curve, volatility, mean reversion rate and counterparty credit risk adjustment. The Company determined these were Level 2 fair value inputs that are substantially observable in active markets or can be derived from observable data. In each of January 2024 and 2025, the Company received $25.0 million related to the 2023 and 2024 earn-out payments, respectively. See Note 6—Derivative Instruments for additional information.
Investment in unconsolidated affiliate. The Company owns common units in Energy Transfer LP (“Energy Transfer”) which are accounted for using the fair value option under FASB ASC 825-10, Financial Instruments. The fair value of the Company’s investment in Energy Transfer was determined using Level 1 inputs based upon the quoted market price of Energy Transfer’s publicly traded common units at September 30, 2025 and December 31, 2024, respectively. See Note 9—Investment in Unconsolidated Affiliate for additional information.
Non-Financial Assets and Liabilities
The fair value of the Company’s non-financial assets and liabilities measured on a non-recurring basis are determined using valuation techniques that include Level 3 inputs.
Asset retirement obligations. The initial measurement of ARO at fair value is recorded in the period in which the liability is incurred. Fair value is determined by calculating the present value of estimated future cash flows related to the liability. Estimating the future ARO requires management to make estimates and judgments regarding the timing and existence of a liability, as well as what constitutes adequate restoration when considering current regulatory requirements. Inherent in the fair value calculation are numerous assumptions and judgments, including the ultimate costs, inflation factors, credit-adjusted discount rates, timing of settlement and changes in the legal, environmental and regulatory environments.
Oil and gas and other properties. The Company records its properties at fair value when acquired in a business combination or upon impairment for proved oil and gas properties and other properties. Fair value is determined using a discounted cash flow model. The inputs used are subject to management’s judgment and expertise and include, but are not limited to, future production volumes based upon estimates of proved reserves, future commodity prices (adjusted for basis differentials), estimates of future operating and development costs and a risk-adjusted discount rate.
No impairment expense was recorded on proved oil and gas properties during the three or nine months ended September 30, 2025. The Company will continue to evaluate the recoverability of the carrying value of its oil and gas properties as a result of a future material or extended decline in the price of crude oil, NGLs or natural gas or a material increase in the costs of labor, materials or services.
Business Combinations. The Company records the fair value of the oil and gas properties acquired using an income approach based on the net discounted future cash flows from the oil and gas properties and related assets acquired. The inputs utilized in the valuation of the oil and gas properties acquired included mostly unobservable inputs which fall within Level 3 of the fair value hierarchy. Such inputs included estimates of future oil and gas production from the properties’ reserve reports, commodity prices based on forward pricing assumptions (adjusted for basis differentials), operating and development costs, expected future development plans for the properties and the utilization of a discount rate based on a market-based weighted-average cost of capital. The Company also recorded ARO assumed in this acquisition at fair value. The inputs utilized in valuing the assumed ARO were mostly Level 3 unobservable inputs, including estimated economic lives of oil and natural gas wells as of the acquisition date, anticipated future plugging and abandonment costs and an appropriate credit-adjusted risk-free rate to discount such costs. This valuation technique was used in the following business combination:
•Enerplus Arrangement. On May 31, 2024, the Company completed the Arrangement with Enerplus. The assets acquired and liabilities assumed were recorded at fair value as of May 31, 2024. In addition, the Company recorded goodwill as a result of the Enerplus Arrangement, which was fully impaired during the second quarter of 2025, as described under Goodwill Impairment below.
See Note 8—Acquisitions for additional information.
Goodwill Impairment. The Company tested goodwill for impairment annually on October 1 or whenever events or changes in circumstances indicated that the fair value of its reporting unit may have been reduced below its carrying value. The decline in the Company’s market capitalization during the second quarter of 2025, which was impacted by a decline in crude oil and natural gas prices, indicated that it was more likely than not that the fair value of the Company’s reporting unit was less than its carrying value, which warranted a goodwill impairment test as of June 30, 2025. The fair value of the Company’s reporting unit was determined using an income approach analysis based on the Company’s net discounted future cash flows. The discounted cash flows were based on management’s expectations for the future and unobservable inputs and assumptions, which included estimates of future oil and gas production from the Company’s reserve report, commodity prices based on sales contract terms or forward pricing assumptions as of the date of the estimate (adjusted for basis differentials), operating and development costs, and a discount rate based on the Company’s weighted-average cost of capital (all of which are designated as Level 3 inputs within the fair value hierarchy). The impairment test performed by the Company indicated that the fair value of its reporting unit was less than its carrying value, and that there was no remaining implied fair value attributable to goodwill. Based on these results, the Company recognized a non-cash impairment charge of $539.3 million to reduce the carrying value of goodwill to zero as of June 30, 2025. The non-cash impairment charge is included within impairment and exploration expenses on the Condensed Consolidated Statements of Operations for the nine months ended September 30, 2025.