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Fair Value Measurements
 3 Months Ended
Mar. 31, 2023
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
The Company has adopted and follows ASC 820, Fair Value Measurements and Disclosures, for measurement and disclosures about fair value of its financial instruments. ASC 820 establishes a framework for measuring fair value in U.S. GAAP, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, ASC 820 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by ASC 820 are:
Level 1 — Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.
Level 2 — Inputs (other than quoted market prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.
Level 3 — Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. Valuation of instruments includes unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.
As defined by ASC 820, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale, which was further clarified as the price that would be received to sell an asset or paid to transfer a liability (“an exit price”) in an orderly transaction between market participants at the measurement date.
As required, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.
The following table presents the carrying amounts and fair values of the Company’s financial instruments as of March 31, 2023 and December 31, 2022:
March 31, 2023December 31, 2022
(in thousands)
Carrying ValueFair ValueCarrying ValueFair Value
Assets:
Derivative instruments - commodity derivatives$16,608 $16,608 $10,089 $10,089 
Liabilities:
Derivative instruments - common stock warrants$6,624 $6,624 $11,902 $11,902 
Revolving credit facilities$25,000 $25,000 $— $— 
Derivative instruments - commodity derivatives$13 $13 $431 $431 
Revolving credit facilities — The carrying amounts of the revolving credit facilities approximate their fair values, as the applicable interest rates are variable and reflective of market rates.
Other financial assets and liabilities — The carrying amounts of the Company’s other financial assets and liabilities, such as revenue receivable and accrued expenses due to sellers, approximate their fair values because of the short maturity of these instruments.
Derivative instruments - commodity derivatives — The fair value of the Company’s derivative instruments is estimated by management considering various factors, including closing exchange and over-the-counter quotations and the time value of
the underlying commitments. The fair value of the Company’s commodity derivative instruments is considered to be a Level 2 measurement. Substantially all of these inputs are observable in the marketplace throughout the full term of the derivative instrument, can be derived from observable data, or supported by observable levels at which transactions are executed in the marketplace. The Company’s valuation models are primarily industry-standard models that consider various inputs including: (i) quoted forward prices for commodities, (ii) current market and contractual prices for the underlying instruments, (iii) applicable credit-adjusted risk-free rate curves, as well as other relevant economic measures.
Derivative instruments - common stock warrants — The fair value of the Company’s common stock warrant liability is valued using the instrument’s publicly listed trading price as of the balance sheet date, which is considered to be a Level 1 measurement due to the use of an observable market quote in an active market.
Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. The following tables summarize (i) the valuation of each of the Company’s financial instruments by required fair value hierarchy levels and (ii) the gross fair value by the appropriate balance sheet classification even when the derivative instruments are subject to netting arrangements and qualify for net presentation in the Company’s condensed consolidated balance sheets as of March 31, 2023 and December 31, 2022. The Company nets the fair value of commodity derivative instruments by counterparty in the Company’s condensed consolidated balance sheets.
March 31, 2023
Fair Value Measurement Using
(in thousands)Level 1Level 2Level 3Total Fair
Value		Gross Amounts
Offset in the Condensed
Consolidated
Balance Sheet		Net Fair Value
Presented in the Condensed
Consolidated
Balance Sheet
Assets (at fair value):
Commodity derivatives – current portion$— $18,941 $— $18,941 $(2,333)$16,608 
Liabilities (at fair value):
Commodity derivatives – current portion— (2,346)— (2,346)2,333 (13)
Warrant liability – noncurrent portion(6,624)— — (6,624)— — 
Net derivative instruments$(6,624)$16,595 $— $9,971 $— $16,595 
December 31, 2022
Fair Value Measurement Using
(in thousands)Level 1Level 2Level 3Total Fair
Value		Gross Amounts
Offset in the Condensed
Consolidated
Balance Sheet		Net Fair Value
Presented in the Condensed
Consolidated
Balance Sheet
Assets (at fair value):
Commodity derivatives – current portion$— $20,197 $— $20,197 $(10,108)$10,089 
Liabilities (at fair value):     
Commodity derivatives – current portion— (10,539)— (10,539)10,108 (431)
Warrant liability - noncurrent portion(11,902)— — (11,902)— — 
Net derivative instruments$(11,902)$9,658 $— $(2,244)$— $9,658