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Note 5 - Derivative Financial Instruments | 9 Months Ended
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Sep. 30, 2023
Notes to Financial Statements |
Derivative Instruments and Hedging Activities Disclosure [Text Block] | NOTE 5. Derivative Financial Instruments The Company primarily utilizes commodity swap contracts, deferred premium put options and deferred premium collars to (i) reduce the effect of price volatility on the commodities the Company produces and sells, (ii) support the Company’s capital budgeting and expenditure plans, (iii) protect the Company’s commitments under the Term Loan Credit Agreement and Senior Credit Facility Agreement and (iv) support the payment of contractual obligations. The following table summarizes the effect of derivative instruments on the Company’s consolidated statements of operations (in thousands):
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
Noncash gain (loss) on derivative instruments, net |  | $ | (15,883 | ) |  | $ | 38,098 |  |  | $ | (9,866 | ) |  | $ | 21,656 |
Cash paid on settlement of derivative instruments, net |  |  | (13,772 | ) |  |  | (2,300 | ) |  |  | (21,032 | ) |  |  | (64,143 | )
Gain (loss) on derivative instruments, net |  | $ | (29,655 | ) |  | $ | 35,798 |  |  | $ | (30,898 | ) |  | $ | (42,487 | )
Crude oil production derivatives. The Company sells its crude oil production at the lease and the sales contracts governing such crude oil production are tied directly to, or are correlated with, NYMEX WTI crude oil prices. As such, the Company uses NYMEX WTI derivative contracts to manage future crude oil price volatility. The Company’s outstanding crude oil derivative instruments as of September 30, 2023 and the weighted average crude oil prices and premiums payable per barrel for those contracts are as follows:
|  |  |  |  |  |  |  |  |  |  | Swaps |  |  | Deferred Premium Collars & Deferred Premium Puts |
Settlement Month |  | Settlement Year |  | Type of Contract |  | Bbls Per Day |  | Index |  | Price |  |  | Floor or Strike Price |  |  | Ceiling Price |  |  | Deferred Premium Payable |
Crude Oil: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Oct - Dec |  | 2023 |  | Swap |  |  | 11,300 |  | WTI |  | $ | 77.84 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Oct - Dec |  | 2023 |  | Collar |  |  | 5,000 |  | WTI |  | $ | — |  |  | $ | 75.50 |  |  | $ | 100.00 |  |  | $ | 0.35 |
Oct - Dec |  | 2023 |  | Put |  |  | 19,000 |  | WTI |  | $ | — |  |  | $ | 69.46 |  |  | $ | — |  |  | $ | 5.00 |
Jan - Mar |  | 2024 |  | Swap |  |  | 4,000 |  | WTI |  | $ | 84.00 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Jan - Mar |  | 2024 |  | Collar |  |  | 6,000 |  | WTI |  | $ | — |  |  | $ | 80.00 |  |  | $ | 100.00 |  |  | $ | 3.50 |
Jan - Mar |  | 2024 |  | Put |  |  | 20,000 |  | WTI |  | $ | — |  |  | $ | 66.44 |  |  | $ | — |  |  | $ | 5.00 |
Apr - Jun |  | 2024 |  | Swap |  |  | 4,000 |  | WTI |  | $ | 84.00 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Apr - Jun |  | 2024 |  | Collar |  |  | 5,500 |  | WTI |  | $ | — |  |  | $ | 69.73 |  |  | $ | 95.00 |  |  | $ | 0.61 |
Apr - Jun |  | 2024 |  | Put |  |  | 14,000 |  | WTI |  | $ | — |  |  | $ | 60.41 |  |  | $ | — |  |  | $ | 5.00 |
Jul - Sep |  | 2024 |  | Swap |  |  | 4,000 |  | WTI |  | $ | 84.00 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Jul - Sep |  | 2024 |  | Collar |  |  | 1,500 |  | WTI |  | $ | — |  |  | $ | 69.00 |  |  | $ | 95.00 |  |  | $ | 0.85 |
Jul - Sep |  | 2024 |  | Put |  |  | 14,000 |  | WTI |  | $ | — |  |  | $ | 60.41 |  |  | $ | — |  |  | $ | 5.00 |
Oct - Dec |  | 2024 |  | Swap |  |  | 5,500 |  | WTI |  | $ | 76.37 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Oct - Dec |  | 2024 |  | Collar |  |  | 10,600 |  | WTI |  | $ | — |  |  | $ | 65.68 |  |  | $ | 90.32 |  |  | $ | 1.85 |
Oct - Dec |  | 2024 |  | Put |  |  | 2,000 |  | WTI |  | $ | — |  |  | $ | 58.00 |  |  | $ | — |  |  | $ | 5.00 |
Jan - Mar |  | 2025 |  | Swap |  |  | 5,500 |  | WTI |  | $ | 76.37 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Jan - Mar |  | 2025 |  | Collar |  |  | 8,000 |  | WTI |  | $ | — |  |  | $ | 65.00 |  |  | $ | 90.00 |  |  | $ | 2.12 |
Jan - Mar |  | 2025 |  | Put |  |  | 2,000 |  | WTI |  | $ | — |  |  | $ | 58.00 |  |  | $ | — |  |  | $ | 5.00 |
Apr - Jun |  | 2025 |  | Swap |  |  | 5,500 |  | WTI |  | $ | 76.37 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Apr - Jun |  | 2025 |  | Collar |  |  | 7,000 |  | WTI |  | $ | — |  |  | $ | 65.00 |  |  | $ | 90.08 |  |  | $ | 2.28 |
Apr - Jun |  | 2025 |  | Put |  |  | 2,000 |  | WTI |  | $ | — |  |  | $ | 58.00 |  |  | $ | — |  |  | $ | 5.00 |
Jul - Sep |  | 2025 |  | Swap |  |  | 3,000 |  | WTI |  | $ | 75.85 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Jul - Sep |  | 2025 |  | Collar |  |  | 7,000 |  | WTI |  | $ | — |  |  | $ | 65.00 |  |  | $ | 90.08 |  |  | $ | 2.28 |
Jul - Sep |  | 2025 |  | Put |  |  | 2,000 |  | WTI |  | $ | — |  |  | $ | 58.00 |  |  | $ | — |  |  | $ | 5.00 |
The Company uses credit and other financial criteria to evaluate the credit standings of, and to select, counterparties to its derivative financial instruments. Although the Company does not obtain collateral or otherwise secure the fair value of its derivative financial instruments, associated credit risk is mitigated by the Company’s credit risk policies and procedures. Net derivative liabilities associated with the Company’s open commodity derivative instruments by counterparty are as follows (in thousands):
|  | As of September 30, 2023 |
Macquarie Bank Limited |  | $ | (16,697 | )
Wells Fargo Bank, National Association |  |  | (10,034 | )
Mercuria Energy Trading SA |  |  | (888 | )
Fifth Third Bank, National Association |  |  | 377 |
|  | $ | (27,242 | )

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- Definition 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. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480237/815-40-50-5 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 5C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480434/815-10-50-5C Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//815/tableOfContent + Details
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