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Derivative Instruments | 6 Months Ended
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Jun. 30, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments | Note 6 - Derivative Instruments The Company may utilize derivative contracts in connection with its natural gas, NGL and power operations to provide an economic hedge of the Company’s exposure to commodity price risk associated with anticipated future natural gas and NGL production, as well as to manage the Company's exposure to delivery risk, optimize physical and contractual assets in the Company's portfolio, and manage working capital requirements. The derivative contracts outstanding as of June 30, 2026 consisted of commodity swaps, basis swaps, put and call options, producer collar agreements, fixed-price natural gas forwards, fixed-price power forwards, and HRCOs, subject to master netting agreements with each individual counterparty. The following table presents gross commodity derivative balances prior to applying netting adjustments recorded in the condensed consolidated balance sheets:
|  |  |  | June 30, 2026
(in thousands) |  | Balance Sheet Location |  | Gross Amounts of Assets and Liabilities |  | Offset Adjustments |  | Net Amounts of Assets and Liabilities
Current derivative assets |  | Commodity derivative assets, current |  | $ | 112,440 |  |  | $ | (13,052) |  |  | $ | 99,388 |
Noncurrent derivative assets |  | Commodity derivative assets |  | 52,084 |  |  | (6,335) |  |  | 45,749 |
Current derivative liabilities |  | Commodity derivative liabilities, current |  | 22,750 |  |  | (13,052) |  |  | 9,698 |
Noncurrent derivative liabilities |  | Commodity derivative liabilities |  | 6,335 |  |  | (6,335) |  |  | — |
|  |  |  | December 31, 2025
(in thousands) |  | Balance Sheet Location |  | Gross Amounts |  | Offset Adjustments |  | Net Amounts of Assets and Liabilities
Current derivative assets |  | Commodity derivative assets, current |  | $ | 66,787 |  |  | $ | (2,887) |  |  | $ | 63,900 |
Noncurrent derivative assets |  | Commodity derivative assets |  | 34,116 |  |  | (7,684) |  |  | 26,432 |
Current derivative liabilities |  | Commodity derivative liabilities, current |  | 11,356 |  |  | (2,887) |  |  | 8,469 |
Noncurrent derivative liabilities |  | Commodity derivative liabilities |  | 13,451 |  |  | (7,684) |  |  | 5,767 |
Derivative Contracts Collar, Commodity Swap, and Basis Swap Contracts A commodity collar provides for a price floor and a price ceiling. The floating price for the collar contract is traded for a fixed price when the floating price is not between the floor and ceiling. If the floating price is between these contracted prices, no trade occurs. A commodity swap agreement is an agreement whereby a floating price based on the underlying commodity is traded for a fixed price over a specified period. Basis swaps provide a guaranteed price differential for natural gas from two different specified delivery points over a specified period. The fair value of open collar, commodity swap, and basis swap contracts reported in the condensed consolidated balance sheets may differ from that which would be realized in the event the Company terminated its position in the respective contract. Fixed-Price Power Forwards and HRCOs For the power generated out of the Temple Plants, the Company enters into fixed-price power sales contracts in which energy is delivered to the ERCOT north hub at a fixed-price per MWh. The contracts contain an agreed upon quantity of total MW and total MWh. The Company enters into fixed-price power purchase contracts to hedge BKV-BPP Retail power purchases for its retail customers. The Company also enters into bilateral HRCO agreements under which counterparties obtain the right to receive specified quantities of power at the Temple Plants, subject to the contractual terms of each agreement. As of June 30, 2026 and December 31, 2025, the Company had four outstanding HRCO contracts with two counterparties. The contracts become effective on January 1 of each calendar year and, as of both June 30, 2026 and December 31, 2025, represented 600 MW of contracted capacity. Under the agreements, the Company receives fixed monthly capacity premiums from the counterparties. If exercised, the counterparties receive specified quantities of power from the Temple Plants with settlement based on contractually specified prices that incorporate the applicable heat rate, natural gas index pricing, and other contractual charges. Premiums received under the Company’s HRCO agreements are recognized within derivative gains, net as realized gains (losses), net on the condensed consolidated statements of income. Fuel costs incurred to satisfy exercised HRCO obligations are recognized within fuel commodity costs on the condensed consolidated statements of income. Outstanding HRCO agreements are remeasured at fair value, with changes in fair value recognized within derivative gains, net as unrealized gains (losses), net on the condensed consolidated statements of income. The following tables present realized and unrealized gains and losses on derivative instruments, including amounts recognized in derivative gains, net and purchased power on the condensed consolidated statements of income:
|  | Income Statement Location |  | Three Months Ended June 30, |  | Six Months Ended June 30,
(in thousands) |  |  | 2026 |  | 2025 |  | 2026 |  | 2025
Realized gains (losses) on derivatives (natural gas) |  | Derivative gains, net |  | $ | 31,609 |  |  | $ | 6,689 |  |  | $ | 2,358 |  |  | $ | (3,685) |
Realized gains (losses) on derivatives (NGL) |  | Derivative gains, net |  | 5,857 |  |  | (43) |  |  | 8,220 |  |  | (5,139) |
Realized gains on derivatives (power sales) |  | Derivative gains, net |  | 60,507 |  |  | 65,939 |  |  | 123,077 |  |  | 133,037 |
Realized losses on derivatives (purchased power) |  | Purchased power |  | (11,516) |  |  | (9,201) |  |  | (20,973) |  |  | (16,619) |
Total realized gains on derivatives, net |  |  |  | $ | 86,457 |  |  | $ | 63,384 |  |  | $ | 112,682 |  |  | $ | 107,594 |
|  | Income Statement Location |  | Three Months Ended June 30, |  | Six Months Ended June 30,
(in thousands) |  |  | 2026 |  | 2025 |  | 2026 |  | 2025
Unrealized gains (losses) on derivatives (natural gas) |  | Derivative gains, net |  | $ | 25,676 |  |  | $ | 67,218 |  |  | 49,595 |  |  | (43,178) |
Unrealized gains (losses) on derivatives (NGL) |  | Derivative gains, net |  | 31,922 |  |  | 17,789 |  |  | (9,411) |  |  | 9,727 |
Unrealized gains (losses) on derivatives (power sales) |  | Derivative gains, net |  | (12,316) |  |  | 29,434 |  |  | 22,525 |  |  | (2,119) |
Unrealized gains (losses) on derivatives (purchased power) |  | Purchased power |  | 205 |  |  | (3,324) |  |  | (3,366) |  |  | (348) |
Total unrealized gains (losses) on derivatives, net |  |  |  | $ | 45,487 |  |  | $ | 111,117 |  |  | $ | 59,343 |  |  | $ | (35,918) |
During the first quarter in 2025, the Company entered into agreements to buy put options and subsequently paid a net premium of $16.2 million for contracts that settle in 2026 and 2027. The put options have an established floor of $3.00 per MMBtu. If at the time of settlement the contracted settlement price falls below the floor, the counterparties pay the Company an amount equal to the difference between the contracted settlement price and the floor multiplied by the contract volumes. The premium paid was recorded as an asset and is subsequently adjusted to the current fair value of the purchased put option. During the fourth quarter of 2025, the Company terminated a portion of the put option contracts scheduled to settle in 2026 in exchange for natural gas fixed-price swap contracts that will settle in 2026. No realized gain or loss was recognized on this transaction. Derivative Contract Volumes and Fair Values The following tables summarize the Company’s outstanding derivative positions as of June 30, 2026 by commodity and contract type, including volume, pricing indices, or reference points, and associated fair values. The following table summarizes the Company's power derivatives:
Instrument |  | Units |  | Quantity |  | Pricing Index |  | Fair Value as of June 30, 2026 (in thousands)
2026 |  |  |  |  |  |  |  |
Swap |  | MMBtu |  | 3,066,000 |  |  | HSC Gas Daily |  | $ | (2,752) |
Power forwards - sales |  | MWh |  | 438,000 |  |  | ERCOT North |  | $ | 5,959 |
Heat rate call option |  | MMBtu |  | 2,628,000 |  |  | Various |  | $ | 13,891 |
Power forwards - purchases |  | MWh |  | 344,030 |  |  | Various |  | $ | (6,145) |
2027 |  |  |  |  |  |  |  |
Swap |  | MMBtu |  | 12,264,000 |  |  | HSC Gas Daily |  | $ | 507 |
Power forwards - sales |  | MWh |  | 1,752,000 |  |  | ERCOT North |  | $ | 2,378 |
Power forwards - purchases |  | MWh |  | 87,600 |  |  | Various |  | $ | (735) |
The following table summarizes the Company's natural gas commodity derivatives indexed to NYMEX Henry Hub pricing:
Instrument |  | MMBtu |  | Weighted Average Price (USD) |  | Weighted Average Price Floor |  | Weighted Average Price Ceiling |  | Fair Value as of June 30, 2026 (in thousands)
2026 |  |  |  |  |  |  |  |  |  |
Swap |  | 75,768,006 |  |  | $ | 3.88 |  |  |  |  |  |  | $ | 34,725 |
2027 |  |  |  |  |  |  |  |  |  |
Swap |  | 98,958,854 |  |  | $ | 3.99 |  |  |  |  |  |  | $ | 49,421 |
Collars |  | 37,662,319 |  |  |  |  | $ | 3.57 |  |  | $ | 4.00 |  |  | $ | 9,378 |
Call options |  | 36,500,000 |  |  |  |  |  |  | $ | 5.00 |  |  | $ | (6,038) |
Put options |  | 36,500,000 |  |  |  |  | $ | 3.00 |  |  |  |  | $ | 10,398 |
2028 |  |  |  |  |  |  |  |  |  |
Swap |  | 94,085,323 |  |  | $ | 3.79 |  |  |  |  |  |  | $ | 12,469 |
2029 |  |  |  |  |  |  |  |  |  |
Swap |  | 35,587,500 |  |  | $ | 3.60 |  |  |  |  |  |  | $ | (29) |
The following table summarizes the Company's natural gas basis derivatives by reference price:
Instrument |  | Basis Reference Price |  | MMBtu |  | Weighted Average Basis Differential |  | Fair Value as of June 30, 2026 (in thousands)
2026 |  |  |  |  |  |  |  |
Swap |  | Transco Leidy Basis |  | 25,526,433 |  |  | $ | (0.79) |  |  | $ | 132 |
Swap |  | HSC Basis |  | 27,600,000 |  |  | $ | (0.32) |  |  | $ | 5,796 |
Swap |  | Transco St 85 (Z4) Basis |  | 18,400,000 |  |  | $ | 0.62 |  |  | $ | (2,384) |
Swap |  | NGPL TXOK Basis |  | 23,943,741 |  |  | $ | (0.40) |  |  | $ | 2,463 |
2027 |  |  |  |  |  |  |  |
Swap |  | Transco Leidy Basis |  | 10,950,000 |  |  | $ | (0.76) |  |  | $ | (1,308) |
Swap |  | HSC Basis |  | 7,300,000 |  |  | $ | (0.25) |  |  | $ | 1,194 |
Swap |  | NGPL TXOK Basis |  | 16,965,270 |  |  | $ | (0.31) |  |  | $ | 1,593 |
2028 |  |  |  |  |  |  |  |
Swap |  | Transco Leidy Basis |  | 7,320,000 |  |  | $ | (0.76) |  |  | $ | (693) |
Swap |  | HSC Basis |  | 10,980,000 |  |  | $ | (0.17) |  |  | $ | 1,229 |
The following table summarizes the Company's natural gas liquids derivatives position by product and reference price:
Instrument |  | Commodity Reference Price |  | Gallons |  | Weighted Average Price (USD) |  | Fair Value as of June 30, 2026 (in thousands)
2026 |  |  |  |  |  |  |  |
Swap |  | OPIS Purity Ethane Mont Belvieu |  | 68,220,796 |  |  | $ | 0.25 |  |  | $ | 591 |
Swap |  | OPIS IsoButane Mont Belvieu Non-TET |  | 7,128,934 |  |  | $ | 0.86 |  |  | $ | (497) |
Swap |  | OPIS Normal Butane Mont Belvieu Non-TET |  | 11,719,147 |  |  | $ | 0.83 |  |  | $ | (938) |
Swap |  | OPIS Propane Mont Belvieu Non-TET |  | 40,975,148 |  |  | $ | 0.70 |  |  | $ | (586) |
Swap |  | OPIS Natural Gasoline Mont Belvieu Non-TET |  | 18,268,618 |  |  | $ | 1.39 |  |  | $ | (1,563) |
2027 |  |  |  |  |  |  |  |
Swap |  | OPIS Purity Ethane Mont Belvieu |  | 79,965,970 |  |  | $ | 0.28 |  |  | $ | 3,841 |
Swap |  | OPIS IsoButane Mont Belvieu Non-TET |  | 13,846,327 |  |  | $ | 0.87 |  |  | $ | 324 |
Swap |  | OPIS Normal Butane Mont Belvieu Non-TET |  | 20,203,274 |  |  | $ | 0.83 |  |  | $ | 246 |
Swap |  | OPIS Propane Mont Belvieu Non-TET |  | 76,415,634 |  |  | $ | 0.70 |  |  | $ | 1,412 |
Swap |  | OPIS Natural Gasoline Mont Belvieu Non-TET |  | 34,754,781 |  |  | $ | 1.39 |  |  | $ | 1,160 |

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