XML 40 R13.htm IDEA: XBRL DOCUMENT v3.26.1
Fair Value Measurements
 3 Months Ended
Mar. 31, 2026
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 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 the Company's financial assets and liabilities that were accounted for at fair value on a recurring basis by level within the fair value hierarchy:
March 31, 2026
Level 1Level 2Level 3Total
(In thousands)
Financial assets:
Commodity derivative assets$— $20,116 $— $20,116 
Financial liabilities:
Commodity derivative liabilities$— $(111,186)$— $(111,186)
Interest rate liabilities$— $(66)$— $(66)
Silverback earnout payment liabilities
$— $— $(7,220)$(7,220)
December 31, 2025
Level 1Level 2Level 3Total
(In thousands)
Financial assets:
Commodity derivative assets$— $31,437 $— $31,437 
Financial liabilities:
Commodity derivative liabilities$— $(7,179)$— $(7,179)
Interest rate liabilities$— $(149)$— $(149)
Silverback earnout payment liabilities$— $— $(3,100)$(3,100)
Silverback 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 March 31, 2026. 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 weighted average cost of debt. Based on the forward strip pricing as of March 31, 2026, the earnout payment liability was increased from $3.1 million to $7.2 million, which includes $937,500 realized and paid in April 2026 and $6.3 million unrealized. The fair value of the unrealized 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 and Divestitures for additional information on the earnout payments. The following table summarizes the changes in the fair value of our Silverback earnout payments, in addition to the range and arithmetic mean of the significant unobservable inputs used in the Level 3 fair value measurement:
Unobservable Inputs
Fair Value
(In thousands)		Valuation Technique
WTI Futures (Arithmetic Average)
December 31, 2025$3,100 
Monte Carlo
$56.91 - $57.96 ($57.23)
Loss on earnout liabilities
4,120 
March 31, 2026$7,220 
Monte Carlo
$68.09 - $98.64 ($74.07)
As of March 31, 2026, $4.5 million, which includes the earned payout of $937,500 for the first quarter of 2026, is accrued in other current liabilities and $2.7 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:
March 31, 2026December 31, 2025
Carrying AmountFair ValueCarrying AmountFair Value
(In thousands)
Credit Facility (Level 2)
$107,000 $107,000 $110,000 $110,000 
Senior Notes (Level 2)(1)
$133,675 $143,798 $137,855 $149,312 
_____________________
(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.