XML 23 R13.htm IDEA: XBRL DOCUMENT v3.22.2.2
Commodity Derivative Financial Instruments
 9 Months Ended
Sep. 30, 2022
Investments, All Other Investments [Abstract]  
Commodity Derivative Financial Instruments

Note 7 – Commodity Derivative Financial Instruments

 

The Company uses derivative financial instruments to manage its exposure to commodity price fluctuations. Commodity derivative instruments are used to reduce the effect of volatility of price changes on the oil and natural gas the Company produces and sells. The Company does not enter into derivative financial instruments for speculative or trading purposes. The Company’s derivative financial instruments consist of put options.

 

The Company does not designate its derivative instruments in such a way that would qualify for hedge accounting. Accordingly, the Company reflects changes in the fair value of its derivative instruments in its consolidated statements of operations as they occur. Unrealized gains and losses related to the contracts are recognized and recorded as changes to the derivative asset or liability on the Company’s consolidated balance sheets.

 

The following table summarizes the net realized and unrealized gains (losses) reported in earnings related to the commodity derivative instruments for the three- and nine-months ended September 30, 2022 and 2021:

 

   Three Months Ended September 30,   Nine Months Ended September 30, 
   2022   2021   2022   2021 
Gain (Loss) on Derivatives:                    
Oil derivatives  $42,474   $112,183   $(93,740)  $(427,766)
Natural gas derivatives   —    (144,454)   —    (144,454)
   $42,474   $(32,271)  $(93,740)  $(572,220)

 

 

The following represents the Company’s net cash payments on derivatives for the three- and nine-months ended September 30, 2022 and 2021:

 

   Three Months Ended September 30,   Nine Months Ended September 30, 
   2022   2021   2022   2021 
                 
Oil derivatives  $(83,832)  $(177,736)  $(244,723)  $(541,709)
Natural gas derivatives   —    (144,454)   —    (144,454)
   $(83,832)  $(322,190)  $(244,723)  $(686,163)

 

 

 

 

The following table sets forth the Company’s outstanding derivative contracts at September 30, 2022:

 

              4th Quarter
2022              
WTI Index Put Options:              
Quarterly volume (MBbls)             24.72
Floor price (Bbl)             $40.00-$70.00
               
  1st Quarter   2nd  Quarter    3rd Quarter   4th Quarter
2023              
WTI Index Put Options:              
Quarterly volume (MBbls) 55.40   15.34   16.86   9.00
Floor price (Bbl) $40.00-$70.00   $55.00   $55.00-$60.00   $50.00