As of September 30, 2025 and December 31, 2024, 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.

The following table presents the carrying amounts, net of discount and deferred financing costs, and estimated fair values of the Company’s debt instruments (in thousands):


	September 30, 2025				December 31, 2024
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
9.000% Second-Priority Senior Secured Notes	$	613,301	$	645,431	$	611,135	$	640,619
9.375% Second-Priority Senior Secured Notes	$	611,646	$	652,556	$	610,264	$	635,750

The carrying values of the Senior Notes are adjusted for discount 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 markets. See Note 7 — Debt for the maturity dates of the Company’s Senior Notes.

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 and costless collars. 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.

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 September 30,					Nine Months Ended September 30,
	2025			2024		2025		2024
Net cash received (paid) on settled derivative instruments	$	16,605		$	6,071	$	55,087	$	(14,941	)
Unrealized gain (loss)		(12,379	)		120,220		20,141		56,472
Price risk management activities income (expense)	$	4,226		$	126,291	$	75,228	$	41,531

The following tables reflect the contracted average daily volumes and weighted average prices under the terms of the Company's derivative contracts as of September 30, 2025:


Swap Contracts
Production Period	Settlement Index	Volumes		Swap Price
Crude oil:		(Bbls)		(per Bbl)
October 2025 – December 2025	NYMEX WTI CMA		23,967	$	71.01
January 2026 – December 2026	NYMEX WTI CMA		8,197	$	65.51
Natural gas:		(MMBtu)		(per MMBtu)
October 2025 – December 2025	NYMEX Henry Hub		40,000	$	3.53
January 2026 – December 2026	NYMEX Henry Hub		26,192	$	3.86


Two-Way Collar Contracts
Production Period	Settlement Index	Volumes		Floor Price		Ceiling Price
Crude oil:		(Bbls)		(per Bbl)		(per Bbl)
January 2026 – December 2026	NYMEX WTI CMA		11,000	$	60.45	$	68.50

The following tables provide additional information related to financial instruments measured at fair value on a recurring basis (in thousands):


	September 30, 2025
	Level 1		Level 2			Level 3		Total
Assets:
Oil and natural gas derivatives	$	—	$	57,808		$	—	$	57,808
Liabilities:
Oil and natural gas derivatives		—		(13,939	)		—		(13,939	)
Total net asset (liability)	$	—	$	43,869		$	—	$	43,869


	December 31, 2024
	Level 1		Level 2			Level 3		Total
Assets:
Oil and natural gas derivatives	$	—	$	33,739		$	—	$	33,739
Liabilities:
Oil and natural gas derivatives		—		(10,011	)		—		(10,011	)
Total net asset (liability)	$	—	$	23,728		$	—	$	23,728

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):


	September 30, 2025				December 31, 2024
	Assets		Liabilities		Assets		Liabilities
Oil and natural gas derivatives:
Current	$	50,305	$	9,270	$	33,486	$	6,474
Non-current		7,503		4,669		253		3,537
Total gross amounts presented on balance sheet		57,808		13,939		33,739		10,011
Less: Gross amounts not offset on the balance sheet		13,939		13,939		10,011		10,011
Net amounts	$	43,869	$	—	$	23,728	$	—

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 September 30, 2025 represent derivative instruments from eight 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 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 September 30, 2025 would have been $43.9 million.