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Fair Value Measurements
 9 Months Ended
Sep. 30, 2025
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
The FASB has established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy consists of three broad levels. Level 1 inputs are the highest priority and consist of unadjusted quoted prices in active markets for identical assets and liabilities. Level 2 are inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. Level 3 are unobservable inputs for an asset or liability.
The carrying values of financial instruments comprising cash, payables, receivables and advances from joint interest owners approximate fair values due to the short-term maturities of these instruments and are classified as Level 1 in the fair value hierarchy. The carrying value reported for the Credit Facility approximates fair value because the underlying instruments are at interest rates which approximate current market rates. The fair value of the Senior Notes is based on estimates of current
rates available for similar issuances with similar maturities and is classified as Level 2 in the fair value hierarchy. The oil and natural gas properties acquired and ARO assumed in the Silverback Acquisition and 2024 New Mexico Asset Acquisition in addition to the fair value of assets and liabilities when considered for impairment are considered Level 3 measurements.
Assets and Liabilities Measured on a Recurring Basis
The fair values of commodity derivatives and interest rate swaps are estimated using discounted cash flow calculations based on forward curves and are classified as Level 2 within the fair value hierarchy. The following table summarizes these instruments that were accounted for at fair value on a recurring basis by level within the fair value hierarchy:
September 30, 2025
Level 1Level 2Level 3Total
(In thousands)
Financial assets:
Commodity derivative assets$— $22,867 $— $22,867 
Interest rate assets$— $218 $— $218 
Financial liabilities:
Commodity derivative liabilities$— $(12,164)$— $(12,164)
Interest rate liabilities$— $(195)$— $(195)
December 31, 2024
Level 1Level 2Level 3Total
(In thousands)
Financial assets:
Commodity derivative assets$— $15,301 $— $15,301 
Interest rate assets$— $1,177 $— $1,177 
Financial liabilities:
Commodity derivative liabilities$— $(13,043)$— $(13,043)
Earnout Payments
The earnout payments in connection with the Silverback Acquisition were valued using a Monte Carlo simulation model that incorporated forward strip pricing as of September 30, 2025. The valuation process involved modeling the potential earnout payments over numerous scenarios based on WTI futures prices. The average expected value from the simulations was then discounted using the Company's cost of debt. The fair value of the earnout payments is considered a Level 3 measurement due to the unobservable inputs including volatility and the discount rate, as well as the detailed modeling required to estimate fair value. See Note 4 - Acquisitions of Oil and Natural Gas Properties for additional information on the earnout payments.
September 30, 2025
Fair Value
(In thousands)
Earnout Payments (Level 3)
$3,100 
As of September 30, 2025, $0.7 million is accrued in other current liabilities and $2.4 million is accrued in other long-term liabilities in our accompanying condensed consolidated balance sheets.
Liabilities Not Measured on a Recurring Basis
The following table summarizes the fair value and carrying amount of the Company's financial instruments:
September 30, 2025December 31, 2024
Carrying AmountFair ValueCarrying AmountFair Value
(In thousands)
Credit Facility (Level 2)
$225,000 $225,000 $115,000 $115,000 
Senior Notes (Level 2)(1)
$142,042 $152,826 $154,494 $172,864 
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(1)The carrying value for the Senior Notes is shown net of unamortized discount and unamortized deferred financing costs.
The carrying value reported for the Credit Facility approximates fair value because the underlying instruments are at interest rates which approximate current market rates. The fair value of the Senior Notes was determined utilizing a discounted cash flow approach.