XML 24 R18.htm IDEA: XBRL DOCUMENT
v3.24.1.u1

Derivative Financial Instruments | 3 Months Ended
--- | ---
Mar. 31, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Financial Instruments | (10) DERIVATIVE FINANCIAL INSTRUMENTS The Company enters into oil and gas swaps and options contracts to accommodate the business needs of its customers. Upon the origination of an oil or gas swap or option contract with a customer, to mitigate the exposure to fluctuations in oil and gas prices, the Company simultaneously enters into an offsetting contract with a counterparty. These derivatives are not designated as hedged instruments and are recorded on the Company's consolidated balance sheet at fair value and are included in other assets. The Company's derivative financial instruments require a daily margin to be posted, which fluctuates with oil and gas prices. At March 31, 2024, the Company had a margin asset included in other assets in the amount of $4.3 million. At December 31, 2023, the Company had a margin liability in other liabilities in the amount of $15.5 million. The Company utilizes dealer quotations and observable market data inputs to substantiate internal valuation models. The notional amounts and estimated fair values of oil and gas derivative positions outstanding are presented in the following table:
|  |  |  | March 31, 2024 |  |  | December 31, 2023 |
Oil and Natural Gas Swaps and Options |  | Notional Units |  | Notional Amount |  |  | Estimated Fair Value |  |  | Notional Amount |  |  | Estimated Fair Value |
|  |  |  | (Notional amounts and dollars in thousands) |
Oil |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivative assets |  | Barrels |  |  | 4,489 |  |  | $ | 5,892 |  |  |  | 3,896 |  |  | $ | 20,567 |
Derivative liabilities |  | Barrels |  |  | (4,489 | ) |  |  | (4,822 | ) |  |  | (3,896 | ) |  |  | (19,512 | )
Gas/Natural Gas Liquids |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivative assets |  | MMBTUs/Gallons |  |  | 40,106 |  |  |  | 21,553 |  |  |  | 46,140 |  |  |  | 20,532 |
Derivative liabilities |  | MMBTUs/Gallons |  |  | (40,106 | ) |  |  | (20,698 | ) |  |  | (46,140 | ) |  |  | (19,664 | )
Total Fair Value |  | Included in |  |  |  |  |  |  |  |  |  |  |  |
Derivative assets |  | Other assets |  |  |  |  |  | 27,445 |  |  |  |  |  |  | 41,099 |
Derivative liabilities |  | Other liabilities |  |  |  |  |  | (25,520 | ) |  |  |  |  |  | (39,176 | )
The following table is a summary of the Company's recognized income related to the activity, which was included in other noninterest income:
|  | Three Months Ended March 31, |
|  | 2024 |  |  | 2023 |
|  | (Dollars in thousands) |
Derivative income |  | $ | 103 |  |  | $ | 89 |
The Company's credit exposure on oil and gas swaps and options varies based on the current market prices of oil and natural gas. Other than credit risk, changes in the fair value of customer positions will be offset by equal and opposite changes in the counterparty positions. The net positive fair value of the contracts represents the profit derived from the activity and is unaffected by the market price movements. The Company's share of total profit is approximately 35%. Customer credit exposure is managed by strict position limits and is primarily offset by first liens on production while the remainder is offset by cash. Counterparty credit exposure is managed by selecting highly rated counterparties (rated A- or better by Standard and Poor's) and monitoring market information. The following table is a summary of the Company's net credit exposure relating to oil and gas swaps and options with bank counterparties:
|  | March 31, 2024 |  |  | December 31, 2023 |
|  | (Dollars in thousands) |
Credit exposure |  | $ | 14,775 |  |  | $ | 39,527 |
Balance Sheet Offsetting Derivatives may be eligible for offset in the consolidated balance sheet and/or subject to master netting arrangements. The Company's derivative transactions with upstream financial institution counterparties and bank customers are generally executed under International Swaps and Derivative Association ("ISDA") master agreements, which include "right of set-off" provisions. In such cases there is generally a legally enforceable right to offset recognized amounts and there may be an intention to settle such amounts on a net basis. Nonetheless, the Company does not generally offset such financial instruments for financial reporting purposes.

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration