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DERIVATIVES AND HEDGING ACTIVITIES
 3 Months Ended
Mar. 31, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVES AND HEDGING ACTIVITIES DERIVATIVES AND HEDGING ACTIVITIES
The Company is exposed to certain risks arising from both its business operations and economic conditions, and it enters into certain derivative contracts to manage exposure to these risks. To minimize counterparty credit risk in derivative instruments, the Company enters into transactions with high credit-rating counterparties. The Company did not elect to apply hedge accounting to these derivative contracts and recorded the fair value of the derivatives on the Condensed Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024.
Interest Rate Risk
The Company manages market risks, including interest rate, liquidity and credit risk primarily by managing the amount, sources and duration of its debt funding and by using derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from activities that result in the payment of future-known and uncertain cash amounts, the value of which is determined by interest rates.
The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract.
As of March 31, 2025, the Company had two interest rate swap contracts with total notional amounts of $1.70 billion effective on May 1, 2023 and maturing on May 31, 2025 that pay a fixed rate ranging from 4.38% to 4.48% and seven interest rate swap contracts with a notional amount of $525.0 million maturing on December 31, 2025 that pays a fixed rate ranging from 3.02% to 4.06%. The fair value or settlement value of the consolidated interest rate swaps outstanding are presented on a gross basis on the Condensed Consolidated Balance Sheets. The following table presents the fair value of derivative assets and liabilities related to the interest rate swap contracts:
March 31,December 31,
20252024
(In thousands)
Derivative assets - current
$453 $504 
      Total derivative assets$453 $504 
Derivative liabilities - current$485 $1,206 
      Total derivative liabilities$485 $1,206 
The Company recorded cash settlements and changes in fair value of the interest rate swap contracts in “Interest expense” in the Condensed Consolidated Statements of Operations. The following table presents interest rate swap derivative activities for the three months ended March 31, 2025 and 2024:
Three Months Ended March 31,
20252024
(In thousands)
Realized (loss) gain on interest rate swaps
$(343)$3,952 
Favorable fair value adjustment
$327 $13,329 
Commodity Price Risk
The results of the Company’s operations may be affected by the market prices of oil, natural gas and NGLs. A portion of the Company’s revenue is directly tied to local natural gas, natural gas liquids and condensate prices in the Permian Basin and the U.S. Gulf Coast. Fluctuations in commodity prices also impact operating cost elements both directly and indirectly. Management regularly reviews the Company’s potential exposure to commodity price risk and manages exposure of such risk through commodity hedge contracts.
During the past twelve months, the Company entered into multiple commodity swap contracts based on the OPIS NGL Mont Belvieu prices for ethane, propane and butane, the Waha Basis index, the HSC index and the NYMEX West Texas Intermediate Control index. These contracts are for various notional quantities of NGLs, natural gas and crude. Similarly, the Company has entered into various natural gas basis spread swaps and crude collars. These contracts are effective over the next 1 to 15 months and are used to hedge against location price risk of the respective commodities resulting from supply and demand volatility and protect cash flows against price fluctuations.
The following table presents detailed information of commodity swaps outstanding as of March 31, 2025 (in thousands, except volumes):
March 31, 2025
CommodityUnit
Notional Volume
Net Fair Value
Natural Gas MMBtus900,000 $(607)
NGL Gallons376,924,800 (22,787)
CrudeBbl586,000 1,133 
Crude CollarsBbl91,400 311 
Natural Gas Basis Spread Swaps
MMBtus19,500,000 (5,050)
$(27,000)
The fair value or settlement value of the outstanding swaps are presented on a gross basis on the Condensed Consolidated Balance Sheets. The following table presents the fair value of derivative assets and liabilities related to commodity swaps:
March 31,December 31,
20252024
(In thousands)
Derivative assets - current
$1,832 $1,804 
Derivative assets - noncurrent83 65 
      Total derivative assets
$1,915 $1,869 
Derivative liabilities - current$26,981 $8,805 
Derivative liabilities - noncurrent
1,934 1,937 
      Total derivative liabilities
$28,915 $10,742 
The Company recorded cash settlements and fair value adjustments on commodity swap derivatives in “Product revenue” in the Condensed Consolidated Statements of Operations. The following table presents commodity swap derivatives activities for the three months ended March 31, 2025 and 2024:
Three Months Ended March 31,
20252024
(In thousands)
Realized loss on commodity swaps
$(4,371)$(198)
Unfavorable fair value adjustment
$(22,498)$(15,286)