XML 23 R12.htm IDEA: XBRL DOCUMENT
v3.21.2

DERIVATIVE FINANCIAL INSTRUMENTS | 9 Months Ended
--- | ---
Sep. 30, 2021
DERIVATIVE FINANCIAL INSTRUMENTS |
DERIVATIVE FINANCIAL INSTRUMENTS | NOTE 6 – DERIVATIVE FINANCIAL INSTRUMENTS The Company is exposed to fluctuations in crude oil and natural gas prices on its production. It utilizes derivative strategies that consist of either a single derivative instrument or a combination of instruments to manage the variability in cash flows associated with the forecasted sale of its future domestic oil and natural gas production. While the use of derivative instruments may limit or partially reduce the downside risk of adverse commodity price movements, the use also may limit future income from favorable commodity price movements. The Company’s derivative financial instruments are recorded at fair value and included as either assets or liabilities in the accompanying balance sheets. The Company has not designated its derivative financial instruments as hedges for accounting purposes, and, as a result, any gains or losses resulting from changes in fair value of outstanding derivative financial instruments and from the settlement of derivative financial instruments are recognized in earnings and included as a component of “Other income (expense)” under the heading “Gain (loss) on derivative contracts” in the accompanying Statements of Operations. The use of derivative transactions involves the risk that the counterparties, which generally are financial institutions, will be unable to meet the financial terms of such transactions. At September 30, 2021, 100% of the Company’s volumes subject to derivative instruments are with lenders under its Credit Facility (as defined in Note 8). The Company is not subject to master netting agreements and classifies the fair value of its derivative positions on a gross basis in its corresponding balance sheets. The following presents the impact of the Company’s contracts on its balance sheets for the periods indicated. ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | As of
​ |  | September 30, 2021 |  | December 31, 2020
Liabilities | ​ |  |  | ​ |  |
Commodity derivative instruments | ​ | $ | (38,402,944) | ​ | $ | (3,287,328)
Derivative liabilities, current | ​ | $ | (38,402,944) | ​ | $ | (3,287,328)
​ | ​ | ​ | ​ | ​ | ​ | ​
Commodity derivative instruments | ​ | $ | (6,061,724) | ​ | $ | (869,273)
Derivative liabilities, non-current | ​ | $ | (6,061,724) | ​ | $ | (869,273)
​ The components of “Gain (loss) on derivative contracts” are as follows for the respective periods: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three months ended September 30, | ​ | Nine months ended September 30,
​ |  | 2021 |  | 2020 |  | 2021 |  | ​ | 2020
Gain (loss) on oil derivative | ​ | $ | (6,720,320) | ​ | $ | (4,502,080) | ​ | $ | (73,387,510) | ​ | $ | 32,900,767
Gain (loss) on natural gas derivatives | ​ |  | — | ​ |  | — | ​ | ​ | (198,689) | ​ | ​ | —
Gain (loss) on derivative contracts | ​ | $ | (6,720,320) | ​ | $ | (4,502,080) | ​ | $ | (73,586,199) | ​ | $ | 32,900,767
​ The components of “Cash (paid) received for commodity derivative settlements” are as follows for the respective periods: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three months ended September 30, | ​ | Nine months ended September 30,
​ |  | 2021 |  | 2020 |  | 2021 |  | 2020
Cash flows from operating activites | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Cash (paid) received on oil derivatives | ​ | $ | (14,921,008) | ​ | $ | 1,726,373 | ​ | $ | (34,030,310) | ​ | $ | 18,814,068
Cash (paid) received on natural gas derivatives | ​ |  | — | ​ |  | — | ​ |  | 743,178 | ​ |  | —
Cash (paid) received from derivative settlements | ​ | $ | (14,921,008) | ​ | $ | 1,726,373 | ​ | $ | (33,287,132) | ​ | $ | 18,814,068
​ Throughout 2020 and the first half of 2021, the Company entered into additional derivative contracts in the form of costless collars, puts and swaps for 2021 and 2022 calendar period for both oil and natural gas. The following tables reflect the details of current contracts as of September 30, 2021: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Date entered into |  | Period covered |  | Barrels per day |  | Put price |  | Call price |  | Swap price
Oil derivative contracts | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
2021 costless collars | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
2/25/2020 |  | Calendar year 2021 |  | 1,000 | ​ | $ | 45.00 | ​ | $ | 54.75 | ​ | ​ | ​
2/25/2020 |  | Calendar year 2021 |  | 1,000 | ​ |  | 45.00 | ​ |  | 52.71 | ​ |  | ​
2/27/2020 | ​ | Calendar year 2021 | ​ | 1,000 | ​ | ​ | 40.00 | ​ | ​ | 55.08 | ​ | ​ | ​
2021 put | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
3/2/2020 | ​ | Calendar year 2021 | ​ | 1,500 | ​ | ​ | 40.00 | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
2021 swaps | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
11/25/2020 | ​ | Calendar year 2021 | ​ | 2,000 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | $ | 45.37
12/2/2020 | ​ | Calendar year 2021 | ​ | 500 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 45.38
12/3/2020 | ​ | Calendar year 2021 | ​ | 500 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 45.00
12/4/2020 |  | Calendar year 2021 |  | 500 | ​ |  | ​ | ​ |  | ​ | ​ | ​ | 45.40
12/4/2020 | ​ | Calendar year 2021 | ​ | 500 | ​ | ​ | ​ | ​ | ​ | ​ | ​ |  | 45.60
12/7/2020 | ​ | Calendar year 2021 | ​ | 500 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 45.96
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
2022 swaps | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
12/4/2020 | ​ | Calendar year 2022 | ​ | 500 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 44.22
12/7/2020 | ​ | Calendar year 2022 | ​ | 500 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 44.75
12/10/2020 | ​ | Calendar year 2022 | ​ | 500 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 44.97
12/17/2020 | ​ | Calendar year 2022 | ​ | 250 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 45.98
1/4/2021 | ​ | Calendar year 2022 | ​ | 250 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 47.00
2/4/2021 |  | Calendar year 2022 |  | 250 | ​ |  | ​ | ​ |  | ​ | ​ |  | 50.05
5/11/2021 | ​ | Calendar year 2022 | ​ | 879 | (1) | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 49.03
(1) | The notional quantity per the swap contract entered into on May 11, 2021 is for 26,750 barrels of oil per month. The 879 represents the daily amount on an annual basis.

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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 http://asc.fasb.org/topic&trid=2229140 + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration