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Financial Instruments | 3 Months Ended
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Mar. 31, 2024
Financial Instruments [Abstract] |
Financial Instruments | Note 5 — Financial Instruments As of March 31, 2024 and December 31, 2023, the carrying amounts of cash and cash equivalents, restricted cash, accounts receivable and accounts payable approximate their fair values because they are highly liquid or due to the short-term nature of these instruments. Debt Instruments The following table presents the carrying amounts, net of discount, premium and deferred financing costs, and estimated fair values of the Company’s debt instruments (in thousands):
| March 31, 2024 |  | December 31, 2023 |
| Carrying Amount |  | Fair Value |  | Carrying Amount |  | Fair Value |
9.000% Second-Priority Senior Secured Notes – due February 2029 | $ | 609,107 |  | $ | 663,894 |  | $ | — |  | $ | — |
9.375% Second-Priority Senior Secured Notes – due February 2031 | $ | 608,985 |  | $ | 666,175 |  | $ | — |  | $ | — |
12.00% Second-Priority Senior Secured Notes – due January 2026 | $ | — |  | $ | — |  | $ | 601,353 |  | $ | 655,130 |
11.75% Senior Secured Second Lien Notes – due April 2026 | $ | — |  | $ | — |  | $ | 234,221 |  | $ | 233,410 |
Bank Credit Facility – matures March 2027 | $ | 315,860 |  | $ | 325,000 |  | $ | 190,100 |  | $ | 200,000 |
The carrying value of the senior notes are adjusted for discount, premium and deferred financing costs. Fair value is estimated (representing a Level 1 fair value measurement) using quoted secondary market trading prices and, where such prices are not available, other observable (Level 2) inputs are used such as quoted prices for similar liabilities in the active market. The carrying amount of the Company’s bank credit facility, as amended and restated (the “Bank Credit Facility”), is presented net of deferred financing costs. The fair value of the Bank Credit Facility is estimated based on the outstanding borrowings since it is secured by the Company’s reserves and the interest rates are variable and reflective of market rates (representing a Level 2 fair value measurement). Oil and Natural Gas Derivatives The Company attempts to mitigate a portion of its commodity price risk and stabilize cash flows associated with sales of oil and natural gas production. The Company is currently utilizing oil and natural gas swaps, costless collars and put options. Swaps are contracts where the Company either receives or pays depending on whether the oil or natural gas floating market price is above or below the contracted fixed price. Costless collars consist of a purchased put option and a sold call option with no net premiums paid to or received from counterparties. Typical collar contracts require payments by the Company if the NYMEX average closing price is above the ceiling price or payments to the Company if the NYMEX average closing price is below the floor price (“two-way collar”). Put options give the owner the right but not the obligation, to sell the underlying commodity at a specified price (i.e. strike price) within a specific period. Certain of the Company’s put options have a deferred premium, which is presented net of the derivative asset. For the deferred premium puts, the Company agrees to pay a premium to the counterparty at the time of settlement. At settlement, if the applicable index price is below the strike price of the put, the Company receives the difference between the strike price and the applicable index price multiplied by the contract volumes less the premium. If the applicable index price settles at or above the strike price of the put, the Company pays only the premium at settlement. The following table presents the impact that derivatives, not designated as hedging instruments, had on its Condensed Consolidated Statements of Operations (in thousands):
| Three Months Ended March 31, |
| 2024 |  | 2023 |
Net cash received (paid) on settled derivative instruments | $ | (3,494 | ) | $ | (12,323 | )
Unrealized gain (loss) |  | (83,568 | ) |  | 71,260 |
Price risk management activities income (expense) | $ | (87,062 | ) | $ | 58,937 |
The following tables reflect the contracted average daily volumes and weighted average prices under the terms of the Company's derivative contracts as of March 31, 2024:
Swap Contracts |
Production Period | Settlement Index | Volumes |  | Swap Price |
Crude oil: |  | (Bbls) |  | (per Bbl) |
April 2024 – December 2024 | NYMEX WTI CMA |  | 28,147 |  | $ | 73.47 |
January 2025 – December 2025 | NYMEX WTI CMA |  | 19,679 |  | $ | 73.19 |
Natural gas: |  | (MMBtu) |  | (per MMBtu) |
April 2024 – December 2024 | NYMEX Henry Hub |  | 34,455 |  | $ | 2.91 |
January 2025 – December 2025 | NYMEX Henry Hub |  | 38,644 |  | $ | 3.60 |
Two-Way Collar Contracts |
Production Period | Settlement Index | Volumes |  | Floor Price |  | Ceiling Price |
Crude oil: |  | (Bbls) |  | (per Bbl) |  | (per Bbl) |
April 2024 – December 2024 | NYMEX WTI CMA |  | 1,000 |  | $ | 70.00 |  | $ | 75.00 |
January 2025 – March 2025 | NYMEX WTI CMA |  | 3,000 |  | $ | 65.00 |  | $ | 84.35 |
Natural gas: |  | (MMBtu) |  | (per MMBtu) |  | (per MMBtu) |
April 2024 – December 2024 | NYMEX Henry Hub |  | 10,000 |  | $ | 4.00 |  | $ | 6.90 |
Long Puts |
Production Period | Settlement Index | Volumes |  | Strike Price |  | Deferred Premium Price |
Crude oil: |  | (Bbls) |  | (per Bbl) |  | (per Bbl) |
April 2024 – December 2024 | NYMEX WTI CMA |  | 4,000 |  | $ | 70.00 |  | $ | (6.28 | )
Natural gas: |  | (MMBtu) |  | (per MMBtu) |  | (per MMBtu) |
May 2024 – December 2024 | NYMEX Henry Hub |  | 13,660 |  | $ | 2.90 |  | $ | (0.40 | )
Swaps with Sold Puts |
Production Period | Settlement Index | Volumes |  | Swap Price |  | Strike Price |
Crude oil: |  | (Bbls) |  | (per Bbl) |  | (per Bbl) |
April 2024 – December 2024 | NYMEX WTI CMA |  | 1,000 |  | $ | 72.20 |  | $ | 60.00 |
The following tables provide additional information related to financial instruments measured at fair value on a recurring basis (in thousands):
| March 31, 2024 |
| Level 1 |  | Level 2 |  | Level 3 |  | Total |
Assets: |  |  |  |  |  |  |  |
Oil and natural gas derivatives | $ | — |  | $ | 24,108 |  | $ | — |  | $ | 24,108 |
Liabilities: |  |  |  |  |  |  |  |
Oil and natural gas derivatives |  | — |  |  | (77,780 | ) |  | — |  |  | (77,780 | )
Total net asset (liability) | $ | — |  | $ | (53,672 | ) | $ | — |  | $ | (53,672 | )
| December 31, 2023 |
| Level 1 |  | Level 2 |  | Level 3 |  | Total |
Assets: |  |  |  |  |  |  |  |
Oil and natural gas derivatives | $ | — |  | $ | 53,703 |  | $ | — |  | $ | 53,703 |
Liabilities: |  |  |  |  |  |  |  |
Oil and natural gas derivatives |  | — |  |  | (8,100 | ) |  | — |  |  | (8,100 | )
Total net asset (liability) | $ | — |  | $ | 45,603 |  | $ | — |  | $ | 45,603 |
Financial Statement Presentation Derivatives are classified as either current or non-current assets or liabilities based on their anticipated settlement dates. Although the Company has master netting arrangements with its counterparties, the Company presents its derivative financial instruments on a gross basis in its Condensed Consolidated Balance Sheets. The following table presents the fair value of derivative financial instruments as well as the potential effect of netting arrangements on the Company's recognized derivative asset and liability amounts (in thousands):
| March 31, 2024 |  | December 31, 2023 |
| Assets |  | Liabilities |  | Assets |  | Liabilities |
Oil and natural gas derivatives: |  |  |  |  |  |  |  |
Current | $ | 18,753 |  | $ | 74,033 |  | $ | 36,152 |  | $ | 7,305 |
Non-current |  | 5,355 |  |  | 3,747 |  |  | 17,551 |  |  | 795 |
Total gross amounts presented on balance sheet |  | 24,108 |  |  | 77,780 |  |  | 53,703 |  |  | 8,100 |
Less: Gross amounts not offset on the balance sheet |  | 18,601 |  |  | 18,601 |  |  | 8,100 |  |  | 8,100 |
Net amounts | $ | 5,507 |  | $ | 59,179 |  | $ | 45,603 |  | $ | — |
Credit Risk The Company is subject to the risk of loss on its financial instruments as a result of nonperformance by counterparties pursuant to the terms of their contractual obligations. The Company has entered into International Swaps and Derivative Association agreements with counterparties to mitigate this risk. The Company also maintains credit policies with regard to its counterparties to minimize overall credit risk. These policies require (i) the evaluation of potential counterparties’ financial condition to determine their credit worthiness; (ii) the regular monitoring of counterparties’ credit exposures; (iii) the use of contract language that affords the Company netting or set off opportunities to mitigate exposure risk; and (iv) potentially requiring counterparties to post cash collateral, parent guarantees, or letters of credit to minimize credit risk. The Company’s assets and liabilities from commodity price risk management activities at March 31, 2024 represent derivative instruments from nine counterparties; all of which are registered swap dealers that have an “investment grade” (minimum Standard & Poor’s rating of BBB- or better) credit rating, and eight of which are parties under the Company’s Bank Credit Facility. The Company enters into derivatives directly with these counterparties and, subject to the terms of the Company’s Bank Credit Facility, is not required to post collateral or other securities for credit risk in relation to the derivative activities. Had the Company’s counterparties failed to perform under existing commodity derivative contracts the maximum loss at March 31, 2024 would have been $5.5 million.

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- Definition Financial instruments. + References No definition available. + Details
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- Definition The entire disclosure for financial instruments. This disclosure includes, but is not limited to, fair value measurements of short and long term marketable securities, international currencies forward contracts, and auction rate securities. Financial instruments may include hedging and non-hedging currency exchange instruments, derivatives, securitizations and securities available for sale at fair value. Also included are investment results, realized and unrealized gains and losses as well as impairments and risk management disclosures. + References No definition available. + Details
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