DERIVATIVES

12 Months Ended

Dec. 31, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

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 in our steamflood operations as well as swaps for natural gas purchases and sales related to our marketing activities. We did not have any commodity derivatives designated as accounting hedges as of and during the years ended December 31, 2024, 2023 and 2022. Unless otherwise indicated, we use the term "hedge" to describe derivative instruments that are designed to achieve our hedging requirements and program goals, even though they are not accounted for as accounting hedges. Our Revolving Credit Facility includes covenants that require us to maintain a certain level of hedges unless the ratio of our indebtedness to Consolidated EBITDAX is less than or equal to 1.5:1.0. For more information on the requirements of our Revolving Credit Facility, see Note 5 Debt.

Summary of Derivative Contracts

We held the following Brent-based contracts as of December 31, 2024:


	Q1 2025		Q2 2025		Q3 2025		Q4 2025		2026		2027		2028
Sold Calls:
Barrels per day	30,000		30,000		30,000		29,000		15,000		—		—
Weighted-average price per barrel	$	87.08	$	87.08	$	87.08	$	87.13	$	85.00	$	—	$	—

Purchased Puts
Barrels per day	30,000		30,000		30,000		29,000		15,000		—		—
Weighted-average price per barrel	$	61.67	$	61.67	$	61.67	$	61.72	$	60.00	$	—	$	—

Swaps
Barrels per day	52,837		46,506		44,126		42,626		30,449		13,882		1,697
Weighted-average price per barrel	$	72.48	$	71.31	$	70.62	$	69.94	$	67.95	$	65.53	$	65.00

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 December 31, 2024, we also held the following swaps to hedge purchased natural gas used in our operations as shown in the table below. Financial swaps are purchased to hedge the cost of natural gas used in production of steam-flood crude volumes. The natural gas price index used to hedge each file is based on a number of factors including liquidity and transportation cost.


	Q1 2025		Q2 2025		Q3 2025		Q4 2025		2026		2027		2028

SoCal Border
MMBtu per day	10,000		29,074		25,750		22,408		660		—		—
Weighted-average price per MMBtu	$	6.02	$	3.44	$	3.48	$	3.53	$	6.29	$	—	$	—

NWPL Rockies
MMBtu per day	50,999		51,750		51,750		51,750		44,618		12,616		1,576
Weighted-average price per MMBtu	$	5.48	$	2.95	$	2.95	$	4.22	$	4.01	$	4.34	$	3.95

PG&E Citygate
MMBtu per day	14,000		—		—		—		—		—		—
Weighted-average price per MMBtu	$	6.10	$	—	$	—	$	—	$	—	$	—	$	—

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 related to our oil production and our marketing activities in operating revenue on our consolidated statements of operations as shown in the table below:


	Year ended December 31,
	2024		2023		2022

	(in millions)
Non-cash commodity derivative gain	$	274	$	260	$	187


Settlements and amortized premiums	(33)		(272)		(738)

Net gain (loss) from commodity derivatives	$	241	$	(12)	$	(551)

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 statements of operations. For the years ended December 31, 2024, we recognized a net loss of $30 million (which includes a non-cash gain of $2 million and $32 million of settlement payments). For the year ended December 31, 2023, we recognized a non-cash loss of $8 million. We did not have derivative contracts related to purchased natural gas for our marketing activities during the year ended December 31, 2022.

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 December 31, 2024 and December 31, 2023. See Note 2 Aera Merger for the fair value of Aera's acquired derivative contracts on July 1, 2024.


December 31, 2024
Classification	Gross Amounts Recognized		Gross Amounts Offset on the Consolidated Balance Sheet		Net Amounts Presented on the Consolidated Balance Sheet

Assets:	(in millions)
Other current assets, net	$	26	$	(12)	$	14
Other noncurrent assets	32		(16)		16

Liabilities:
Current - Fair value of derivative contracts	(62)		12		(50)
Other long-term liabilities	(61)		16		(45)
	$	(65)	$	—	$	(65)


December 31, 2023
Classification	Gross Amounts Recognized		Gross Amounts Offset on the Consolidated Balance Sheet		Net Amounts Presented on the Consolidated Balance Sheet

Assets:	(in millions)
Other current assets, net	$	39	$	(18)	$	21
Other noncurrent assets	38		(32)		6

Liabilities:
Current - Fair value of derivative contracts	(26)		18		(8)
Noncurrent - Fair value of derivative contracts	(34)		32		(2)
	$	17	$	—	$	17

Counterparty Credit Risk

As of December 31, 2024, the majority of our credit exposure was with investment-grade counterparties. We actively evaluate the creditworthiness of our counterparties, assign credit limits and monitor exposure against those assigned limits. We believe exposure to credit-related losses was not significant for all periods presented. At December 31, 2024, and 2023, we did not have collateral posted for financial instruments.