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Commodity Derivative Financial Instruments

9 Months Ended

Sep. 30, 2023

Investments, All Other Investments [Abstract]

Commodity Derivative Financial Instruments

Note 5 – 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 swaps and 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 losses reported in earnings related to the commodity derivative instruments for the three and nine months ended September 30, 2023 and 2022:

 Schedule of commodity derivative instruments

		Three Months Ended September 30,								Nine Months Ended September 30,
		2023				2022				2023				2022
Losses on Derivatives:
Oil derivatives		$	(1,185,921	)		$	42,474			$	(1,319,401	)		$	(93,740	)

The following represents the Company’s net cash payments related to derivatives for the three and nine months ended September 30, 2023 and 2022:

Schedule of net cash payment related derivatives

		Three Months Ended September 30,								Nine Months Ended September 30,
		2023				2022				2023				2022
Oil derivatives		$	(45,855	)		$	(83,832	)		$	(87,042	)		$	(244,723	)

The following table sets forth the Company’s outstanding derivative contracts at September 30, 2023:

Schedule of outstanding derivative contracts

		4th Quarter 2023				1st Quarter 2024				2nd Quarter 2024				3rd Quarter 2024				4th Quarter 2024
WTI Fixed-Price Swaps:
Quarterly volume (MBbls)			38.50				38.00				30.00				30.00				30.00
Weighted-average fixed price (Bbl)			$78.60				$74.01				$72.15				$77.02				$75.57
WTI Index Put Options:
Quarterly volume (MBbls)			41.00
Floor price (Bbl)			$40.00-$50.00

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- Definition

The entire disclosure for financial instruments. This disclosure includes, but is not limited to, fair value measurements of short and long term marketable securities, international currencies forward contracts, and auction rate securities. Financial instruments may include hedging and non-hedging currency exchange instruments, derivatives, securitizations and securities available for sale at fair value. Also included are investment results, realized and unrealized gains and losses as well as impairments and risk management disclosures.

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