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Derivatives | 9 Months Ended
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Sep. 30, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivatives | Derivatives Commodity Derivatives The Company is exposed to commodity price risk, which impacts the predictability of its cash flows from the sale of oil, natural gas and NGL. On occasion, the Company has attempted to manage this risk on a portion of its forecasted oil, natural gas or NGL production sales through the use of commodity derivative contracts. The Company has not designated any of its derivative contracts as hedges for accounting purposes. As applicable, if the Company has open derivative contracts, the Company has recorded such contracts at fair value with changes in derivative contract fair values recognized as a gain or loss on derivative contracts in the condensed consolidated income statements. Commodity derivative contracts were settled on a monthly basis, and the commodity derivative contract valuations were adjusted to the mark-to-market valuation on a quarterly basis. The following table summarizes derivative activity for the three and nine-month periods ended September 30, 2022 and 2021 (in thousands):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
(Gain) loss on derivative contracts | $ | (4,258) |  |  | $ | 4,129 |  |  | $ | (3,194) |  |  | $ | 4,129 |
Realized settlement gains (losses) on derivative contracts | $ | 218 |  |  | $ | — |  |  | $ | (867) |  |  | $ | — |
M aster Netting Agreements and the Right of Offset. As applicable, the Company has had master netting agreements with all of its commodity derivative counterparties and has presented its derivative assets and liabilities with the same counterparty on a net basis in the unaudited condensed consolidated balance sheets. As a result of the netting provisions, the Company's maximum amount of loss under commodity derivative transactions due to credit risk is limited to the net amounts due from its counterparties. The following table summarizes (i) the Company's commodity derivative contracts on a gross basis, (ii) the effects of netting assets and liabilities for which the right of offset exists based on master netting arrangements and (iii) the Company’s net derivative asset and liability positions as of September 30, 2022 and December 31, 2021 (in thousands): September 30, 2022
|  | Gross Amounts |  | Gross Amounts Offset |  | Amounts Net of Offset |  | Financial Collateral |  | Net Amount
Assets |  |  |  |  |  |  |  |  |  |
Derivative contracts - current |  | $ | 4,040 |  |  | $ | — |  |  | $ | 4,040 |  |  | $ | — |  |  | $ | 4,040 |
Total |  | $ | 4,040 |  |  | $ | — |  |  | $ | 4,040 |  |  | $ | — |  |  | $ | 4,040 |
December 31, 2021
|  | Gross Amounts |  | Gross Amounts Offset |  | Amounts Net of Offset |  | Financial Collateral |  | Net Amount
Liabilities |  |  |  |  |  |  |  |  |  |
Derivative contracts - current |  | $ | 200 |  |  | $ | 179 |  |  | $ | 21 |  |  | $ | — |  |  | $ | 21 |
Total |  | $ | 200 |  |  | $ | 179 |  |  | $ | 21 |  |  | $ | — |  |  | $ | 21 |
As of September 30, 2022, the Company's open derivative contracts consisted of natural gas commodity derivative contracts under which we will receive a fixed price for the contract and pay a floating market price to the counterparty over a specified period for a contracted volume. These commodity derivative contracts consisted of the following:
|  | Notional |  | Units |  | Weighted Average Fixed Price per Unit
Natural Gas Price Swaps: October 2022 - March 2023 |  | 2,088,000 |  |  | MMBtu |  | $ | 8.39 |
Because we did not designate any of our derivative contracts as hedges for accounting purposes, changes in the fair value of our derivative contracts were recognized as gains and losses in current period earnings. As a result, and as applicable, our current period earnings could have been significantly affected by changes in the fair value of our commodity derivative contracts. Changes in fair value were principally measured based on a comparison of future prices to the contract price at the end of the period. Fair Value of Derivatives The following table presents the fair value of the Company’s derivative contracts on a net basis with the same counterparty (in thousands):
Type of Contract |  | Balance Sheet Classification |  | September 30, 2022
Derivative assets |  |  |  |
Natural Gas |  | Current assets - Derivative Contracts |  | $ | 4,040 |
Total net derivative contracts |  | $ | 4,040 |
Type of Contract |  | Balance Sheet Classification |  | December 31, 2021 |  |
Natural Gas and NGL price swaps |  | Current liabilities - Derivative Contracts |  | $ | 21 |  |  |
Total net derivative contracts |  | $ | 21 |  |  |
See Note 2 for additional discussion of the fair value measurement of the Company’s derivative contracts.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI https://asc.fasb.org/topic&trid=2229140 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 40 -Section 50 -Paragraph 5 -Subparagraph (f) -URI https://asc.fasb.org/extlink&oid=126731327&loc=d3e90205-114008 + Details
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