FINANCIAL INSTRUMENTS

3 Months Ended

Mar. 31, 2025

Notes to Financial Statements

FINANCIAL INSTRUMENTS

NOTE 2 — FINANCIAL INSTRUMENTS

The Company’s financial instruments consist of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, accrued liabilities, derivative instruments and debt. Except for derivative instruments and debt, the carrying amount of the Company’s financial instruments approximates fair value due to the short-term, highly liquid nature of these instruments.

Derivative Instruments

The following table reflects the contracted volumes and weighted average prices under the terms of the Company’s open Henry Hub (NYMEX) derivative contracts as of March 31, 2025:


				Average				Costless Collar						Puts
				Daily		Total		Weighted			Weighted			Weighted
		Instrument		Volumes		Volumes		Floor Price			Ceiling Price			Floor Price
Period		Type		(Mmbtu)		(Mmbtu)			($/Mmbtu)			($/Mmbtu)			($/Mmbtu)
Apr 2025 - Dec 2025		costless collar		70,000		19,250,000		$	4.02		$	5.32		$	—
Apr 2025 - Dec 2025		puts		62,182		17,100,000		$	—		$	—		$	2.27
Jan 2026 - Dec 2026		puts		55,890		20,400,000		$	—		$	—		$	2.35
Jan 2027 - Dec 2027		puts		52,603		19,200,000		$	—		$	—		$	2.37
Jan 2028 - Apr 2028		puts		49,587		6,000,000		$	—		$	—		$	2.50

⁽¹⁾	MMbtu – Million British Thermal Units

The fair value of the Company’s derivative financial instruments was recorded in the Condensed Consolidated Balance Sheets as follows (in thousands):


		March 31,			December 31,
		2025			2024
Prepaid expenses and other current assets		$	5,481		$	868
Other assets			3,805			4,150
Accrued liabilities			5,430			3,731
Other liabilities			—			—

The Company measures the fair value of its derivative instruments on a recurring basis by applying the income approach, using models with inputs that are classified within Level 2 of the valuation hierarchy. The income approach converts expected future cash flows to a present value amount based on market expectations. The inputs used for the fair value measurement of derivative financial instruments are the exercise price, the expiration date, the settlement date, notional quantities, the implied volatility, the discount curve with spreads and published commodity future prices.

The impact of commodity derivative contracts on the Condensed Consolidated Statements of Operations were as follows (in thousands):


		Three Months Ended March 31,
		2025			2024
Realized loss (gain)		$	3,639		$	(3,755)
Unrealized gain			(882)			(1,122)
Derivative loss (gain), net		$	2,757		$	(4,877)

Debt

The following table presents the net values and estimated fair values of the Company’s debt (in thousands):


		March 31, 2025						December 31, 2024
		Net Value			Fair Value			Net Value			Fair Value
Term Loan		$	—		$	—		$	112,132		$	109,727
11.75% Notes			—			—			272,081			278,765
10.75% Notes			341,172			339,283			—			—
TVPX Loan			8,875			9,199			9,010			9,395
Total		$	350,047		$	348,482		$	393,223		$	397,887

The fair values of the TVPX Loan and the Term Loan were measured using a discounted cash flows model and current market rates. The fair values of the 10.75% Notes and the 11.75% Notes were measured using quoted prices, although the market is inactive. The fair value of debt was classified as Level 2 within the valuation hierarchy.