Derivatives

It is the Company’s policy to enter into derivative contracts only with counterparties that are creditworthy financial or commodity hedging institutions deemed by management as competent and competitive market makers. As of June 30, 2020, the Company did not post collateral under its one open derivative contract as trades were uncollateralized.

The Company may utilize fixed-price swaps or costless put/call collars to hedge a portion of its anticipated future production. Fixed-price swaps are designed so that the Company receives or makes payments based on a differential between fixed and variable prices for the volumes under contract. A costless collar consists of a sold call, which establishes a maximum price the Company will receive for the volumes under contract and a purchased put that establishes a minimum price. The Company has elected not to designate its open derivative contracts for hedge accounting. Accordingly, the Company records the net change in the mark-to-market valuation of the derivative contracts and all payments and receipts on settled derivative contracts in “Net (gain) loss on derivative contracts” on the consolidated statements of operations.



	Years Ended June 30,
	2020			2019
Realized (gain) loss	$	(528,139	)	$	—
Unrealized (gain) loss	1,911,343			—
Net (gain) loss on derivative contracts	$	1,383,204		$	—

The Company’s derivative contract is recorded at fair market value and is included in the consolidated balance sheets as an asset or a liability. Refer to Note 20 – Fair Value Measurement for the table summarizing the location and fair value amounts of the Company’s open derivative contract in the consolidated balance sheet as of June 30, 2020. The Company did not have any open positions as of June 30, 2019.

The following sets forth a summary of the Company’s open crude oil derivative positions as of June 30, 2020.



Period	Type of Contract	Volumes in Barrels	Price / Price Range	Weighted Average Floor Price per Bbl.	Weighted Average Ceiling Price per Bbl.
July 2020 to December 2020	Fixed-Price Swap	257,600	$32	$32	$—

The Company presents the fair value of its derivative contracts at the gross amounts in the consolidated balance sheets. The Company enters into an International Swap Dealers Association Master Agreement ("ISDA") with each counterparty prior to a derivative contract with such counterparty. The ISDA is a standard contract that governs all derivative contracts entered into between the Company and the respective counterparty. The ISDA allows for offsetting of amounts payable or receivable between the Company and the counterparty, at the election of both parties, for transactions that occur on the same date and in the same currency.