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DERIVATIVES | 9 Months Ended
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Sep. 30, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVES | DERIVATIVES The Company periodically enters into commodity derivative contracts to mitigate a portion of its exposure to potentially adverse market changes in commodity prices for its expected future oil, natural gas, and NGL production and the associated impact on cash flows. The Company's commodity derivative contracts consist of swap and collar arrangements as well as Roll Differential swaps. As of September 30, 2022, all derivative counterparties were members of the Credit Facility lender group and all commodity derivative contracts are entered into for other-than-trading purposes. The Company does not designate its commodity derivative contracts as hedging instruments. In a typical swap arrangement, if the agreed upon published third-party index price (“index price”) is lower than the fixed contract price at the time of settlement, the Company receives the difference between the index price and the fixed contract price. If the index price is higher than the fixed contact price at the time of settlement, the Company pays the difference between the index price and the fixed contract price. In a fixed for floating swap arrangement, if the index price is lower than the fixed contract price at the time of settlement, the Company pays the difference between the index price and the fixed contract price. If the index price is higher than the fixed contact price at the time of settlement, the Company receives the difference between the index price and the fixed contract price. A typical collar arrangement effectively establishes a floor and ceiling price on contracted volumes through the use of a short call and a long put (“two-way collar”). When the index price is above the ceiling price at the time of settlement, the Company pays the difference between the index price and the ceiling price. When the index price is below the floor price at the time of settlement, the Company receives the difference between the index price and floor price. When the index price is between the floor price and ceiling price, no payment or receipt occurs. A minority of our collar arrangements combine a two-way collar with a short put that holds an exercise price below the floor price (“three-way collar”). In these arrangements, when the index price is below the floor price at the time of settlement, the Company receives the difference between the index price and the floor price, capped at the difference between the floor price and the exercise price of the short put. The Company has also entered into crude oil swap contracts to fix the differential in pricing between the NYMEX calendar month average and the physical crude oil delivery month (“Roll Differential”) in which the Company pays the periodic variable Roll Differential and receives a weighted-average fixed price differential. The weighted-average differential represents the amount of reduction to NYMEX West Texas Intermediate (“WTI”) prices for the notional volumes covered by the swap contracts. As of September 30, 2022, the Company had entered into the following commodity price derivative contracts:
|  | Contract Period
|  | Q4 2022 |  | Q1 2023 |  | Q2 2023 |  | Q3 2023 |  | Q4 2023 |  | 2024
Oil Derivatives (volumes in Bbl/day and prices in $/Bbls) |  |  |  |  |  |  |  |  |  |  |  |
Swaps |  |  |  |  |  |  |  |  |  |  |  |
NYMEX WTI Volumes |  | 10,543 |  | 1,320 |  | 1,205 |  | 1,053 |  | 984 |  | 1,019
Weighted-Average Contract Price |  | $ | 51.94 |  |  | $ | 74.29 |  |  | $ | 73.49 |  |  | $ | 70.92 |  |  | $ | 70.61 |  |  | $ | 66.78 |
Swaps (Fixed for Floating) (1) |  |  |  |  |  |  |  |  |  |  |  |
NYMEX WTI Volumes |  | 9,538 |  | — |  | — |  | — |  | — |  | —
Weighted-Average Contract Price |  | $ | 77.55 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Two-Way Collars |  |  |  |  |  |  |  |  |  |  |  |
NYMEX WTI Volumes |  | 9,131 |  | 1,054 |  | — |  | — |  | — |  | —
Weighted-Average Ceiling Price |  | $ | 67.38 |  |  | $ | 72.70 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Weighted-Average Floor Price |  | $ | 42.39 |  |  | $ | 40.00 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Three-Way Collars |  |  |  |  |  |  |  |  |  |  |  |
NYMEX WTI Volumes |  | — |  | 1,721 |  | 1,436 |  | 1,302 |  | 1,172 |  | 143
Weighted-Average Ceiling Price |  | $ | — |  |  | $ | 58.75 |  |  | $ | 57.69 |  |  | $ | 57.48 |  |  | $ | 56.49 |  |  | $ | 56.25 |
Weighted-Average Floor Price |  | $ | — |  |  | $ | 49.31 |  |  | $ | 48.10 |  |  | $ | 47.91 |  |  | $ | 49.04 |  |  | $ | 45.00 |
Weighted-Average Sold Put Price |  | $ | — |  |  | $ | 39.25 |  |  | $ | 37.70 |  |  | $ | 37.41 |  |  | $ | 39.04 |  |  | $ | 35.00 |
Roll Differential Swaps (2) |  |  |  |  |  |  |  |  |  |  |  |
NYMEX WTI Volumes |  | 2,000 |  | — |  | — |  | — |  | — |  | —
Weighted-Average Contract Price |  | $ | 0.22 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Natural Gas Derivatives (volumes in MMBtu/day and prices in $/million British thermal units (“MMBtu”)) |  |  |  |  |  |  |  |  |  |  |  |
Swaps |  |  |  |  |  |  |  |  |  |  |  |
NYMEX HH Volumes |  | 57,720 |  | 47,368 |  | 46,374 |  | 46,120 |  | 45,947 |  | 24,148
Weighted-Average Contract Price |  | $ | 2.92 |  |  | $ | 2.65 |  |  | $ | 2.64 |  |  | $ | 2.61 |  |  | $ | 2.60 |  |  | $ | 2.70 |
CIG Volumes |  | 10,000 |  | — |  | — |  | — |  | — |  | —
Weighted-Average Contract Price |  | $ | 2.13 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Two-Way Collars |  |  |  |  |  |  |  |  |  |  |  |
NYMEX HH Volumes |  | 79,148 |  | 9,558 |  | 1,563 |  | 1,887 |  | 1,756 |  | 1,033
Weighted-Average Ceiling Price |  | $ | 3.69 |  |  | $ | 3.23 |  |  | $ | 2.78 |  |  | $ | 2.96 |  |  | $ | 2.96 |  |  | $ | 3.05 |
Weighted-Average Floor Price |  | $ | 2.60 |  |  | $ | 2.03 |  |  | $ | 2.21 |  |  | $ | 2.34 |  |  | $ | 2.38 |  |  | $ | 2.38 |
Three-Way Collars |  |  |  |  |  |  |  |  |  |  |  |
NYMEX HH Volumes |  | 127 |  | 899 |  | 505 |  | — |  | — |  | 303
Weighted-Average Ceiling Price |  | $ | 2.74 |  |  | $ | 3.19 |  |  | $ | 3.33 |  |  | $ | — |  |  | $ | — |  |  | $ | 3.49 |
Weighted-Average Floor Price |  | $ | 2.50 |  |  | $ | 2.50 |  |  | $ | 2.50 |  |  | $ | — |  |  | $ | — |  |  | $ | 2.50 |
Weighted-Average Sold Put Price |  | $ | 2.00 |  |  | $ | 2.00 |  |  | $ | 2.00 |  |  | $ | — |  |  | $ | — |  |  | $ | 2.00 |
NGL Derivatives (volumes in Bbls/day and prices in $/Bbl) |  |  |  |  |  |  |  |  |  |  |  |
Swaps |  |  |  |  |  |  |  |  |  |  |  |
OPIS Basket Volumes |  | 4,000 |  | — |  | — |  | — |  | — |  | —
Weighted-Average Contract Price |  | $ | 20.22 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
______________________________ (1) During the third quarter of 2022, the Company entered into fixed for floating swaps to achieve a fixed settlement of $30.71 per Bbl on the majority of its fourth quarter 2022 oil swap positions (weighted-average contract price of $46.84 per Bbl). (2) The weighted-average differential represents the amount of reduction to NYMEX WTI prices for the notional volumes covered by the swap contracts. Derivative Assets and Liabilities Fair Value The Company’s commodity price derivatives are measured at fair value and are included in the accompanying balance sheets as derivative assets and liabilities. The following table contains a summary of all the Company’s derivative positions reported on the accompanying balance sheets as well as a reconciliation between the gross assets and liabilities and the potential effects of master netting arrangements on the fair value of the Company’s commodity derivative contracts as of the dates indicated (in thousands):
|  | September 30, 2022 |  | December 31, 2021
Derivative Assets: |  |  |  |
Commodity contracts - current |  | $ | 5,727 |  |  | $ | 3,393 |
Commodity contracts - noncurrent |  | 2,764 |  |  | — |
Total derivative assets |  | 8,491 |  |  | 3,393 |
Amounts not offset in the accompanying balance sheets |  | (8,491) |  |  | (3,393) |
Total derivative assets, net |  | $ | — |  |  | $ | — |
Derivative Liabilities: |  |  |  |
Commodity contracts - current |  | $ | (144,176) |  |  | $ | (219,804) |
Commodity contracts - long-term |  | (32,916) |  |  | (19,959) |
Total derivative liabilities |  | (177,092) |  |  | (239,763) |
Amounts not offset in the accompanying balance sheets |  | 8,491 |  |  | 3,393 |
Total derivative liabilities, net |  | $ | (168,601) |  |  | $ | (236,370) |
The following table summarizes the components of the derivative gain (loss) presented on the accompanying statements of operations for the periods below (in thousands):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
Derivative cash settlement loss: |  |  |  |  |  |  |
Oil contracts | $ | (67,623) |  |  | $ | (19,838) |  |  | $ | (307,563) |  |  | $ | (41,454) |
Gas contracts | (66,610) |  |  | (6,708) |  |  | (149,485) |  |  | (9,082) |
NGL contracts | (9,678) |  |  | — |  |  | (35,072) |  |  | — |
Total derivative cash settlement loss | (143,911) |  |  | (26,546) |  |  | (492,120) |  |  | (50,536) |
Change in fair value gain (loss) | 153,192 |  |  | (9,678) |  |  | 133,258 |  |  | (83,077) |
Total derivative gain (loss) | $ | 9,281 |  |  | $ | (36,224) |  |  | $ | (358,862) |  |  | $ | (133,613) |

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI https://asc.fasb.org/topic&trid=2229140 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 40 -Section 50 -Paragraph 5 -Subparagraph (f) -URI https://asc.fasb.org/extlink&oid=126731327&loc=d3e90205-114008 + Details
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