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Note 4 - Fair Value Measurements | 9 Months Ended
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Sep. 30, 2023
Notes to Financial Statements |
Fair Value Disclosures [Text Block] | NOTE 4. Fair Value Measurements The Company determines fair value based on the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are based upon inputs that market participants use in pricing an asset or liability, which are characterized according to a hierarchy that prioritizes those inputs based on the degree to which they are observable. Observable inputs represent market data obtained from independent sources, whereas unobservable inputs reflect a company’s own market assumptions, which are used if observable inputs are not reasonably available without undue cost and effort. The fair value input hierarchy level to which an asset or liability measurement in its entirety falls is determined based on the lowest level input that is significant to the measurement in its entirety. The three input levels of the fair value hierarchy are as follows:
| ● | Level 1 – quoted prices for identical assets or liabilities in active markets.
| ● | Level 2 – quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates) and inputs derived principally from or corroborated by observable market data by correlation or other means.
| ● | Level 3 – unobservable inputs for the asset or liability, typically reflecting management’s estimate of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore, determined using model-based techniques, including discounted cash flow models.
Assets and liabilities measured at fair value on a recurring basis. Assets and liabilities measured at fair value on a recurring basis as of September 30, 2023 and December 31, 2022 are as follows (in thousands):
|  | As of September 30, 2023 |
|  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |  |  | Total |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity price derivatives – current |  | $ | — |  |  | $ | 3,247 |  |  | $ | — |  |  | $ | 3,247 |
Commodity price derivatives – noncurrent |  |  | — |  |  |  | 1,030 |  |  |  | — |  |  |  | 1,030 |
Total assets |  |  | — |  |  |  | 4,277 |  |  |  | — |  |  |  | 4,277 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity price derivatives – current |  |  | — |  |  |  | 27,776 |  |  |  | — |  |  |  | 27,776 |
Commodity price derivatives – noncurrent |  |  | — |  |  |  | 3,743 |  |  |  | — |  |  |  | 3,743 |
Total liabilities |  |  | — |  |  |  | 31,519 |  |  |  | — |  |  |  | 31,519 |
Total recurring fair value measurements |  | $ | — |  |  | $ | (27,242 | ) |  | $ | — |  |  | $ | (27,242 | )
|  | As of December 31, 2022 |
|  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |  |  | Total |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity price derivatives– current |  | $ | — |  |  | $ | 17 |  |  | $ | — |  |  | $ | 17 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity price derivatives – current |  |  | — |  |  |  | 16,702 |  |  |  | — |  |  |  | 16,702 |
Commodity price derivatives – noncurrent |  |  | — |  |  |  | 691 |  |  |  | — |  |  |  | 691 |
Total liabilities |  |  | — |  |  |  | 17,393 |  |  |  | — |  |  |  | 17,393 |
Total recurring fair value measurements |  | $ | — |  |  | $ | (17,376 | ) |  | $ | — |  |  | $ | (17,376 | )
Commodity price derivatives. The Company’s commodity price derivatives are currently made up of crude oil swap contracts and deferred premium collars and deferred premium put options. The Company measures derivatives using an industry-standard pricing model that is provided by the counterparties. The inputs utilized in the third-party discounted cash flow and option-pricing models for valuing commodity price derivatives include forward prices for crude oil, contracted volumes, volatility factors and time to maturity, which are considered Level 2 inputs. Assets and liabilities measured at fair value on a nonrecurring basis. Certain assets and liabilities are measured at fair value on a nonrecurring basis. These assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances. Specifically, (i) stock-based compensation is measured at fair value on the date of grant based on Level 1 inputs for restricted stock awards or Level 2 inputs for stock option awards based upon market data, and (ii) the estimates and fair value measurements used for the evaluation of proved property for potential impairment using Level 3 inputs based upon market conditions in the area. The Company assesses the recoverability of the carrying amount of certain assets and liabilities whenever events or changes in circumstances indicate the carrying amount of an asset or liability may not be recoverable. These assets and liabilities can include inventories, proved and unproved crude oil and natural gas properties and other long-lived assets that are written down to fair value when they are impaired or held for sale. The Company did not record any impairments to proved or unproved crude oil and natural gas properties for the periods presented in the accompanying consolidated financial statements. Financial instruments not carried at fair value. Carrying values and fair values of financial instruments that are not carried at fair value in the consolidating balance sheets are as follows (in thousands):
|  | As of September 30, 2023 |  |  | As of December 31, 2022 |
|  | Carrying |  |  |  |  |  |  | Carrying |  |  |  |  |
|  | Value |  |  | Fair Value |  |  | Value |  |  | Fair Value |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Long-term debt: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
10.625% Senior Notes (a) |  | $ | — |  |  | $ | — |  |  | $ | 250,000 |  |  | $ | 250,000 |
10.000% Senior Notes (a) |  | $ | — |  |  | $ | — |  |  | $ | 225,000 |  |  | $ | 225,000 |
| (a) | Fair value is determined using Level 2 inputs. The Company’s senior unsecured notes are quoted, but not actively traded, on major exchanges; therefore, fair value is based on periodic values as quoted on major exchanges. See Note 7 for additional information.
The Company has other financial instruments consisting primarily of cash and cash equivalents, accounts receivable, accounts payable, long-term debt (specifically the Term Loan Credit Agreement, Senior Credit Facility Agreement and the Prior Credit Agreement), and other current assets and liabilities that approximate fair value due to the nature of the instrument and their relatively short maturities.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482106/820-10-50-2 + Details
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