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DERIVATIVES | 6 Months Ended
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Jun. 30, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVES | DERIVATIVES We continue to maintain a commodity hedging program primarily focused on crude oil to help protect our cash flows, margins and capital program from the volatility of commodity prices. We also enter into natural gas swaps for the purpose of hedging our fuel consumption at one of our steamfloods as well as swaps for natural gas purchases and sales related to our marketing activities. We did not have any derivative instruments designated as accounting hedges as of and for the three and six months ended June 30, 2024 and 2023. Unless otherwise indicated, we use the term "hedge" to describe derivative instruments that are designed to implement our hedging strategy. Summary of Derivative Contracts We held the following Brent-based contracts as of June 30, 2024:
|  | Q3 2024 |  | Q4 2024 |  | Q1 2025 |  | Q2 2025 |  | 2H 2025
Sold Calls |  |  |  |  |  |  |  |  |  |
Barrels per day |  | 30,000 |  |  | 29,000 |  |  | 30,000 |  |  | 30,000 |  |  | 29,500 |
Weighted-average price per barrel |  | $ | 90.07 |  |  | $ | 90.07 |  |  | $ | 87.08 |  |  | $ | 87.08 |  |  | $ | 87.11 |
Purchased Puts |  |  |  |  |  |  |  |  |  |
Barrels per day |  | 30,000 |  |  | 29,000 |  |  | 30,000 |  |  | 30,000 |  |  | 29,500 |
Weighted-average price per barrel |  | $ | 65.17 |  |  | $ | 65.17 |  |  | $ | 61.67 |  |  | $ | 61.67 |  |  | $ | 61.69 |
Swaps |  |  |  |  |  |  |  |  |  |
Barrels per day |  | 8,875 |  |  | 8,875 |  |  | 5,250 |  |  | 3,500 |  |  | 3,250 |
Weighted-average price per barrel |  | $ | 80.10 |  |  | $ | 79.94 |  |  | $ | 76.27 |  |  | $ | 72.50 |  |  | $ | 72.50 |
The outcomes of the derivative positions are as follows: •Sold calls – we make settlement payments for prices above the indicated weighted-average price per barrel. •Purchased puts – we receive settlement payments for prices below the indicated weighted-average price per barrel. •Swaps – we make settlement payments for prices above the indicated weighted-average price per barrel and receive settlement payments for prices below the indicated weighted-average price per barrel. At June 30, 2024, we also held the following swaps to hedge purchased natural gas used in our operations as shown in the table below.
|  |  | Q3 2024 |  | Q4 2024
Swaps: |  |  |  |  |
MMBtu per day |  |  | 10,000 |  |  | 10,000 |
Weighted-average price per MMBtu |  |  | $ | 5.65 |  |  | $ | 5.65 |
We also have a limited number of derivative contracts related to our natural gas marketing activities that are intended to lock in locational price spreads. These derivative contracts are not significant to our results of operations or financial statements taken as a whole. Fair Value of Derivatives Derivative instruments not designated as hedging instruments are required to be recorded on the balance sheet at fair value. We report gains and losses on our derivative contracts which hedge commodity price risk related to our oil production and our marketing activities in operating revenue on our consolidated statements of operations as shown in the table below:
| Three months ended June 30, |  | Six months ended June 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
| (in millions) |  | (in millions)
Non-cash commodity derivative gain (loss) | $ | 11 |  |  | $ | 94 |  |  | $ | (48) |  |  | $ | 201 |
Settlements and premiums | (6) |  |  | (63) |  |  | (18) |  |  | (128) |
Net gain (loss) from commodity derivatives | $ | 5 |  |  | $ | 31 |  |  | $ | (66) |  |  | $ | 73 |
We report gains and losses on our derivative contracts for purchased natural gas used to generate steam for our steamflood operations as a component of operating expense on our consolidated statement of operations. For the three and six months ended June 30, 2024, we recognized a net loss of $1 million (which includes a non-cash gain of $3 million and $4 million of settlement payments) and a net loss of $2 million (which includes a non-cash gain of $4 million and $6 million of settlement payments) in other operating expenses, net on our consolidated statement of operations. We did not have derivative contracts related to purchased natural gas for our marketing activities during the three and six months ended June 30, 2023. Our derivative contracts are measured at fair value using industry-standard models with various inputs, including quoted forward prices, and are classified as Level 2 in the required fair value hierarchy for the periods presented. The following tables present the fair values of our outstanding commodity derivatives as of June 30, 2024 and December 31, 2023:
June 30, 2024
Classification |  | Gross Amounts at Fair Value |  | Netting |  | Net Fair Value
|  | (in millions)
Other current assets, net |  | $ | 13 |  |  | $ | (13) |  |  | $ | — |
Other noncurrent assets |  | 15 |  |  | (15) |  |  | — |
Current liabilities |  | (41) |  |  | 13 |  |  | (28) |
Noncurrent liabilities |  | (25) |  |  | 15 |  |  | (10) |
|  | $ | (38) |  |  | $ | — |  |  | $ | (38) |
December 31, 2023
Classification |  | Gross Amounts at Fair Value |  | Netting |  | Net Fair Value
|  | (in millions)
Other current assets, net |  | $ | 39 |  |  | $ | (18) |  |  | $ | 21 |
Other noncurrent assets |  | 38 |  |  | (32) |  |  | 6 |
Current liabilities |  | (26) |  |  | 18 |  |  | (8) |
Noncurrent liabilities |  | (34) |  |  | 32 |  |  | (2) |
|  | $ | 17 |  |  | $ | — |  |  | $ | 17 |

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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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