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Derivative Instruments | 9 Months Ended
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Sep. 30, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments | Derivative Instruments Oil and Natural Gas Contracts The Company uses commodity based derivative contracts to reduce exposure to fluctuations in oil and natural gas prices. While the use of these contracts partially limits the downside risk for adverse price changes, their use can also partially limit future revenues from favorable price changes. We have not designated our derivative contracts as hedges for accounting purposes, and therefore changes in the fair value of derivatives are included and recognized in other income (expense) in the accompanying condensed consolidated statements of operations. As of September 30, 2024, the Company’s oil and natural gas derivative instruments consisted of fixed price swaps, costless collars, and basis swaps. The following table summarizes the open financial derivative positions as of September 30, 2024, related to our future oil and natural gas production:
|  |  |  | Weighted Average Price
Calendar Quarter / Year |  | Notional Volume |  | Fixed |  | Put |  | Call
|  |  |  | ($ per unit)
Oil Swaps (Bbl) |  |  |  |  |  |  |  |
Q4 2024 |  | 435,000 |  |  | $ | 74.90 |  |  |  |  |
2025 |  | 645,000 |  |  | $ | 73.63 |  |  |  |  |
Natural Gas Swaps (Mcf) |  |  |  |  |  |  |  |
Q4 2024 |  | 510,000 |  |  | $ | 3.62 |  |  |  |  |
2025 |  | 1,875,000 |  |  | $ | 3.60 |  |  |  |  |
2026 |  | 555,000 |  |  | $ | 4.02 |  |  |  |  |
Oil Collars (Bbl) |  |  |  |  |  |  |  |
Q4 2024 |  | 390,000 |  |  |  |  | $ | 61.92 |  |  | $ | 83.39 |
2025 |  | 1,700,000 |  |  |  |  | $ | 63.28 |  |  | $ | 76.59 |
2026 |  | 600,000 |  |  |  |  | $ | 59.99 |  |  | $ | 78.74 |
Natural Gas Collars (Mcf) |  |  |  |  |  |  |  |
Q4 2024 |  | 405,000 |  |  |  |  | $ | 3.50 |  |  | $ | 4.45 |
2025 |  | 1,445,000 |  |  |  |  | $ | 3.30 |  |  | $ | 4.30 |
2026 |  | 1,975,000 |  |  |  |  | $ | 3.08 |  |  | $ | 3.79 |
Oil Basis (Bbl) |  |  |  |  |  |  |  |
Q4 2024 |  | 330,000 |  |  | $ | 0.97 |  |  |  |  |
Interest Rate Contracts The Company entered into floating-to-fixed interest rate swaps, in which it will receive a floating market rate equal to one-month CME Term Secured Overnight Financing Rate and will pay a fixed interest rate, to manage future interest rate exposure related to the Company’s Credit Facility. In March 2024, the Company entered into a fixed-to-floating interest rate swap for the period from May 2024 to December 2024, to reduce our interest rate exposure, which resulted in a gain of approximately $1 million on a notional amount of $80 million. The remaining gain of $0.4 million will be realized upon settlement of the contracts in 2024. At the time of settlement of these interest rate derivative contracts, gain or loss on settlement will be included in interest expense on the condensed consolidated statements of operations. Gains on interest rate swaps were $0.4 million and $0.6 million for the three and nine months ended September 30, 2024. The following table summarizes the open interest rate derivative positions as of September 30, 2024:
Open Coverage Period |  | Position |  | Notional Amount |  | Fixed Rate
|  |  |  | (In thousands) |  |
October 2024 - April 2026 |  | Long |  | $ | 30,000 |  |  | 3.180 | %
October 2024 - April 2026 |  | Long |  | $ | 50,000 |  |  | 3.039 | %
October 2024 - December 2024 |  | Short |  | $ | 80,000 |  |  | 4.910 | %
Balance Sheet Presentation of Derivatives The following tables present the location and fair value of the Company’s derivative contracts included in the condensed consolidated balance sheets as of September 30, 2024, and December 31, 2023:
|  | September 30, 2024
Balance Sheet Classification |  | Gross Fair Value |  | Amounts Netted |  | Net Fair Value
|  | (In thousands)
Current derivative assets |  | $ | 15,774 |  |  | $ | (3,579) |  |  | $ | 12,195 |
Non-current derivative assets |  | 7,262 |  |  | (4,787) |  |  | 2,475 |
Current derivative liabilities |  | (3,579) |  |  | 3,579 |  |  | — |
Non-current derivative liabilities |  | (4,817) |  |  | 4,787 |  |  | (30) |
Total |  | $ | 14,640 |  |  | $ | — |  |  | $ | 14,640 |
|  | December 31, 2023
Balance Sheet Classification |  | Gross Fair Value |  | Amounts Netted |  | Net Fair Value
|  | (In thousands)
Current derivative assets |  | $ | 8,948 |  |  | $ | (3,935) |  |  | $ | 5,013 |
Non-current derivative assets |  | 6,687 |  |  | (4,391) |  |  | 2,296 |
Current derivative liabilities |  | (4,295) |  |  | 3,935 |  |  | (360) |
Non-current derivative liabilities |  | (4,391) |  |  | 4,391 |  |  | — |
Total |  | $ | 6,949 |  |  | $ | — |  |  | $ | 6,949 |
The following table presents the components of the Company's gain (loss) on derivatives, net for the periods presented below:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
| (In thousands)
Settlements on derivative contracts | $ | 815 |  |  | $ | (6,269) |  |  | $ | (910) |  |  | $ | (13,660) |
Non-cash gain (loss) on derivatives | 23,402 |  |  | (29,076) |  |  | 7,691 |  |  | (7,265) |
Gain (loss) on derivatives, net | $ | 24,217 |  |  | $ | (35,345) |  |  | $ | 6,781 |  |  | $ | (20,925) |

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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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