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v3.25.1

Note 5 - Derivative Financial Instruments | 3 Months Ended
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Mar. 31, 2025
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, collars and enhanced 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 condensed consolidated statements of operations (in thousands):
|  | Three Months Ended March 31, |
|  | 2025 |  |  | 2024 |
Noncash derivative loss, net |  | $ | (4,856 | ) |  | $ | (47,895 | )
Cash payments on settled derivatives, net |  |  | (3,071 | ) |  |  | (5,148 | )
Derivative loss, net |  | $ | (7,927 | ) |  | $ | (53,043 | )
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 Cushing and Argus WTI Midland crude oil prices. As such, the Company primarily uses NYMEX WTI Cushing derivative contracts as well as Argus WTI Midland basis swaps from time to time to manage future crude oil price volatility. The Argus WTI Midland basis differential represents the amount of premium to NYMEX WTI Cushing. The Company’s outstanding NYMEX WTI Cushing and Argus WTI Midland crude oil derivative instruments as of March 31, 2025 and the weighted average crude oil prices and premiums payable per barrel for those contracts are as follows:
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Swaps |  |  | Collars, Enhanced Collars & Deferred Premium Puts |
Settlement Month |  |  | Settlement Year |  |  | Type of Contract |  |  | Bbls Per Day |  |  | Index |  |  | Price per Bbl |  |  | Floor or Strike Price per Bbl |  |  | Ceiling Price per Bbl |  |  | Deferred Premium Payable per Bbl |
Crude Oil: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Apr - Jun |  |  |  | 2025 |  |  |  | Swap |  |  |  | 5,500 |  |  |  | WTI Cushing |  |  | $ | 76.37 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Apr - Jun |  |  |  | 2025 |  |  |  | Collar |  |  |  | 7,989 |  |  |  | WTI Cushing |  |  | $ | — |  |  | $ | 64.38 |  |  | $ | 88.55 |  |  | $ | 2.00 |
Apr - Jun |  |  |  | 2025 |  |  |  | Put |  |  |  | 9,000 |  |  |  | WTI Cushing |  |  | $ | — |  |  | $ | 65.78 |  |  | $ | — |  |  | $ | 5.00 |
Jul - Sep |  |  |  | 2025 |  |  |  | Swap |  |  |  | 3,000 |  |  |  | WTI Cushing |  |  | $ | 75.85 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Jul - Sep |  |  |  | 2025 |  |  |  | Collar |  |  |  | 7,000 |  |  |  | WTI Cushing |  |  | $ | — |  |  | $ | 65.00 |  |  | $ | 90.08 |  |  | $ | 2.28 |
Jul - Sep |  |  |  | 2025 |  |  |  | Put |  |  |  | 9,000 |  |  |  | WTI Cushing |  |  | $ | — |  |  | $ | 65.78 |  |  | $ | — |  |  | $ | 5.00 |
Oct - Dec |  |  |  | 2025 |  |  |  | Collar |  |  |  | 5,000 |  |  |  | WTI Cushing |  |  | $ | — |  |  | $ | 60.00 |  |  | $ | 72.80 |  |  | $ | — |
Jan - Mar |  |  |  | 2026 |  |  |  | Collar |  |  |  | 5,000 |  |  |  | WTI Cushing |  |  | $ | — |  |  | $ | 60.00 |  |  | $ | 72.80 |  |  | $ | — |
Natural gas production derivatives. The Company sells its natural gas production at the tailgate of the gas processing plants and the sales contracts governing such natural gas production are tied directly to, or are correlated with, HH natural gas prices. As such, the Company primarily uses HH derivative contracts to manage future natural gas price volatility. The Company’s outstanding HH natural gas derivative instruments as of March 31, 2025 and the weighted average natural gas prices per MMBtu for those contracts are as follows:
Settlement Month |  |  | Settlement Year |  |  | Type of Contract |  |  | MMBtu Per Day |  |  | Index |  |  | Price per MMBtu |
Natural Gas: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Apr – Jun |  |  |  | 2025 |  |  |  | Swap |  |  |  | 30,000 |  |  |  | HH |  |  | $ | 4.43 |
Jul – Sep |  |  |  | 2025 |  |  |  | Swap |  |  |  | 30,000 |  |  |  | HH |  |  | $ | 4.43 |
Oct – Dec |  |  |  | 2025 |  |  |  | Swap |  |  |  | 30,000 |  |  |  | HH |  |  | $ | 4.43 |
Jan – Mar |  |  |  | 2026 |  |  |  | Swap |  |  |  | 19,667 |  |  |  | HH |  |  | $ | 4.43 |
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 assets associated with the Company’s open commodity derivative instruments by counterparty are as follows (in thousands):
|  | As of March 31, 2025 |
Macquarie Bank Limited |  | $ | (2,812 | )
Wells Fargo Bank, National Association |  |  | (1,200 | )
Fifth Third Bank, National Association |  |  | (583 | )
Mercuria Energy Trading SA |  |  | 1,940 |
|  | $ | (2,655 | )

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