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DERIVATIVES

12 Months Ended

Dec. 31, 2025

DERIVATIVES

DERIVATIVES

NOTE 4—DERIVATIVES

Commodity Derivatives

The Partnership’s ongoing operations expose it to changes in the market price for oil and natural gas. To mitigate the inherent commodity price risk associated with its operations, the Partnership uses oil and natural gas commodity derivative financial instruments. From time to time, such instruments may include variable-to-fixed-price swaps, costless collars, fixed-price contracts, and other contractual arrangements. The Partnership enters into oil and natural gas derivative contracts that contain netting arrangements with each counterparty.

At December 31, 2025, the Partnership’s commodity derivative contracts consisted of fixed price swaps, under which the Partnership receives a fixed price for the contract and pays a floating market price to the counterparty over a specified period for a contracted volume.

The Partnership’s oil fixed price swap transactions are settled based upon the average daily prices for the calendar month of the contract period, and its natural gas fixed price swap transactions are settled based upon the last scheduled trading day of the first nearby month futures contract corresponding to the relevant contract period. Settlement for oil derivative contracts occurs in the succeeding month and natural gas derivative contracts are settled in the production month. Changes in the fair values of the Partnership’s commodity derivative instruments are recognized as gains or losses in the current period and are presented on a net basis within revenue in the accompanying consolidated statements of operations.

The Partnership has not designated any of its derivative contracts as hedges for accounting purposes. Changes in the fair value consisted of the following:

​

​	​	​	​	​	​	​	​	​	​
​	​	Year Ended December 31,
​	​	2025		​	2024		​	2023
​	​	(In thousands)
Beginning fair value of derivative instruments	​	$	1,836	​	$	14,047	​	$	(12,324)
Gain (loss) on commodity derivative instruments, net	​	​	12,091	​	​	(1,345)	​	​	20,888
Net cash received on settlements of derivative instruments	​	​	(4,864)	​	​	(10,866)	​	​	5,483
Ending fair value of derivative instruments	​	$	9,063	​	$	1,836	​	$	14,047

​

The following table presents the fair value of the Partnership’s derivative contracts for the periods indicated:

​

​	​	​	​	​	​	​	​	​
​	​	​	​	December 31,		​	December 31,
Classification	​	Balance Sheet Location	​	2025		​	2024
​	​	​	​	(In thousands)
Assets:	​	​	​	​	​	​	​	​
Current assets	​	Derivative assets	​	$	6,504	​	$	2,404
Long-term assets	​	Derivative assets	​	​	2,587	​	​	566
Liabilities:	​	​	​	​	​	​	​	​
Current liabilities	​	Derivative liabilities	​	​	—	​	​	(255)
Long-term liabilities	​	Derivative liabilities	​	​	(28)	​	​	(879)
​	​	​	​	$	9,063	​	$	1,836

​

At December 31, 2025, the Partnership’s open commodity derivative contracts consisted of the following:

Oil Price Swaps

​	​	​	​	​	​	​	​	​	​	​	​
​	​	Notional	​	Weighted Average		​	Range (per Bbl)
​	​	Volumes (Bbl)	​	Fixed Price (per Bbl)		​	​	Low	​	High
January 2026 - December 2026	​	595,680	​	$	67.75	​	$	63.33	​	$	70.78
January 2027 - December 2027	​	614,295	​	$	61.31	​	$	58.06	​	$	63.75

Natural Gas Price Swaps

​	​	​	​	​	​	​	​	​	​	​	​
​	​	Notional	​	Weighted Average		​	Range (per MMBtu)
​	​	Volumes (MMBtu)	​	Fixed Price (per MMBtu)		​	Low		​	High
January 2026 - December 2026	​	5,256,000	​	$	3.69	​	$	3.33	​	$	4.07
January 2027 - December 2027	​	5,361,120	​	$	3.93	​	$	3.47	​	$	4.46

​

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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.

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