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Derivatives
 12 Months Ended
Dec. 31, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives Derivatives
We utilize derivatives, such as swaps, puts, calls and collars to hedge a portion of our forecasted oil and gas production and gas purchases to reduce exposure to fluctuations in oil and natural gas prices, which addresses our market risk. In addition to satisfying the oil hedging requirements in our 2021 RBL Facility, we target covering our operating expenses and a majority of our fixed charges, which includes capital needed to sustain production levels, as well as interest and fixed dividends as applicable, with the oil and gas sales hedges for a period of up to three years out. Additionally, we target fixing the price for a large portion of our natural gas purchases used in our steam operations for up to three years. We have also entered into Utah gas transportation contracts to help reduce the price fluctuation exposure, however these do not qualify as hedges. We also, from time to time, have entered into agreements to purchase a portion of the natural gas we require for our operations, which we do not record at fair value as derivatives because they qualify for normal purchases and normal sales exclusions. We had no such transactions in the periods presented.
For fixed-price oil and gas sales swaps, we are the seller, so we make settlement payments for prices above the indicated weighted-average price per barrel and per mmbtu, respectively, and receive settlement payments for prices below the indicated weighted-average price per barrel and per mmbtu, respectively.
For our long put spreads, in addition to any deferred premium payments, we would receive settlement payments for prices below the indicated highest price of the long put with the maximum payment received per bbl equal to the difference between the indicated prices of the long and short put. No payment would be made or received for prices above the highest indicated price of the long put. The short put spreads offset the long put spreads.
A producer collar is used for the sale of our produced oil and is the combination of buying a put option and selling a call option. We would receive settlement payments for prices below the indicated weighted-average price per bbl of the put option and we would make settlement payments for prices above the indicated weighted-average price of the call option. No payment would be made or received for prices in between the indicated weighted-average price of the put and call.
A consumer collar is used for the purchase of fuel gas and is the combination of buying a call option and selling a put option. We would receive settlement payments for prices above the indicated weighted-average price of the call option and we would make settlement payments for prices below the indicated weighted-average price of the put option. No payment would be made or received for prices in between the indicated weighted-average price of the put and call.
For natural gas basis swaps, we make settlement payments if the difference between NWPL and Henry Hub is below the indicated weighted-average price of our contracts and receive settlement payments if the difference between NWPL and Henry Hub is above the indicated weighted-average price.
For some of our options we paid or received a premium at the time the positions were created and for others, the premium payment or receipt is deferred until the time of settlement. As of December 31, 2022 we have net payable deferred premiums of approximately $5 million, which is reflected in the mark-to-market valuation and will be payable through December 31, 2024.
As of December 31, 2022, we had the following crude oil production and gas purchases hedges.
Q1 2023Q2 2023Q3 2023Q4 2023FY 2024FY 2025
Brent - Crude Oil Production
Swaps
Hedged volume (bbls)1,385,278 1,387,750 1,211,717 1,196,000 3,392,048 — 
Weighted-average price ($/bbl)$77.15 $77.01 $76.26 $76.18 $76.12 $— 
Put Spreads
Long $50/$40 Put Spread hedged volume (bbls)
630,000 637,000 644,000 644,000 1,647,000 — 
Short $50/$40 Put Spread hedged volume (bbls)
90,000 91,000 92,000 92,000 366,000 — 
Producer Collars
Hedged volume (bbls)360,000 364,000 368,000 368,000 1,098,000 2,212,500 
Weighted-average price ($/bbl)
$40.00/$106.00
$40.00/$106.00
$40.00/$106.00
$40.00/$106.00
$40.00/$105.00
$58.35/$91.45
Henry Hub - Natural Gas Purchases
Consumer Collars
Hedged volume (mmbtu)2,110,000 1,820,000 — — — — 
Weighted-average price ($/mmbtu)
$4.00/$2.75
$4.00/$2.75
$— $— $— $— 
NWPL - Natural Gas Purchases
Hedged volume (mmbtu)1,800,000 3,640,000 3,680,000 3,680,000 7,320,000 6,080,000 
Weighted-average price ($/mmbtu)$6.40 $5.34 $5.34 $5.34 $4.27 $4.27 
Gas Basis Differentials
NWPL/HH - basis swaps
Hedged volume (mmbtu)1,800,000 1,820,000 1,840,000 1,840,000 — — 
Weighted-average price ($/mmbtu)$1.12 $1.12 $1.12 $1.12 $— $— 
In addition to the table above, in January 2023, we terminated the following basis swaps (NWPL/HH): 4,900,000 mmbtu (20,000 mmbtu/d) at $1.12 beginning March 2023 through October 2023, and 610,000 mmbtu (10,000 mmbtu/d) at $1.12 beginning November 2023 through December 2023.
In January 2023 we also added the following Producer Collars (Brent): 3,627 bbl (117 bbl/d) at $60.00/$88.50 for January 2025, 270,000 bbl (3,000 bbl/d) at $60.00/$88.35 for January 2025 through March of 2025, and 472,500 bbl (5,250 bbl/d) at $60.00/$82.21 for January 2026 through March of 2026, which are in addition to the table above. These Producer Collars (Brent) were cashless.
Our commodity derivatives are measured at fair value using industry-standard models with various inputs including publicly available underlying commodity prices and forward curves, and all are classified as Level 2 in the required fair value hierarchy for the periods presented. These commodity derivatives are subject to counterparty netting. The following tables present the fair values (gross and net) of our outstanding derivatives as of December 31, 2022 and 2021. The following tables present the fair values (gross and net) of our outstanding derivatives as of December 31, 2022 and 2021.
December 31, 2022
Balance Sheet ClassificationGross Amounts Recognized at
Fair Value		Gross Amounts Offset
in the Balance Sheet		Net Fair Value
Presented in the
 Balance Sheet
(in thousands)
Assets:
Commodity Contracts
Current assets
$66,974 $(30,607)$36,367 
Commodity Contracts
Non-current assets
39,886 (39,810)76 
Liabilities:
Commodity Contracts
Current liabilities
(61,713)30,607 (31,106)
Commodity Contracts
Non-current liabilities
(53,452)39,810 (13,642)
Total derivatives
$(8,305)$— $(8,305)

December 31, 2021
Balance Sheet ClassificationGross Amounts Recognized at
Fair Value		Gross Amounts Offset
in the Balance Sheet		Net Fair Value
Presented in the
 Balance Sheet
(in thousands)
Assets:
Commodity Contracts
Current assets
$5,360 $(5,360)$— 
Commodity Contracts
Non-current assets
29,828 (28,758)1,070 
Liabilities:
Commodity Contracts
Current liabilities
(34,985)5,360 (29,625)
Commodity Contracts
Non-current liabilities
(47,335)28,758 (18,577)
Total derivatives
$(47,132)$— $(47,132)
By using derivative instruments to economically hedge exposure to changes in commodity prices, we expose ourselves to credit risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes us, which creates credit risk. We do not receive collateral from our counterparties.
We minimize the credit risk in derivative instruments by limiting our exposure to any single counterparty. In addition, our 2021 RBL Facility prevents us from entering into hedging arrangements that are secured, except with our lenders and their affiliates that have margin call requirements, that otherwise require us to provide collateral or with a non-lender counterparty that does not have an A or A2 credit rating or better from Standards & Poor’s or Moody’s, respectively. In accordance with our standard practice, our commodity derivatives are subject to counterparty netting under agreements governing such derivatives which partially mitigates the counterparty nonperformance risk.
(Losses) Gains on Derivatives
A summary of gains and losses on the derivatives included on the statements of operations is presented below:
Year Ended December 31,
202220212020
(in thousands)
(Losses) gains on oil and gas sales derivatives
$(137,109)$(156,399)$117,781 
Gains (losses) on natural gas purchase derivatives88,795 38,577 (1,035)
Total (losses) gains on derivatives
$(48,314)$(117,822)$116,746 
For the years ended December 31, 2022 and 2021 we paid net cash settlements of approximately $88 million and $92 million, respectively. For the year ended December 31, 2020, we received net cash scheduled settlements of approximately $142 million.