v3.25.2
DERIVATIVE INSTRUMENTS AND PRICE RISK MANAGEMENT
 6 Months Ended
Jun. 30, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVE INSTRUMENTS AND PRICE RISK MANAGEMENT DERIVATIVE INSTRUMENTS AND PRICE RISK MANAGEMENT
The Company utilizes various commodity price derivative instruments to (i) reduce the effects of volatility in price changes on the crude oil and natural gas commodities it produces and sells, (ii) reduce commodity price risk and (iii) provide a base level of cash flow in order to assure it can execute at least a portion of its capital spending. In addition, from time to time the Company utilizes interest rate swaps to mitigate exposure to changes in interest rates on the Company’s variable-rate indebtedness.

All derivative instruments are recorded in the Company’s condensed balance sheets as either assets or liabilities measured at their fair value (see Note 9).  The Company has not designated any derivative instruments as hedges for accounting purposes and does not enter into such instruments for speculative trading purposes.  If a derivative does not qualify as a hedge or is not designated as a hedge, the changes in the fair value are recognized in the Company’s condensed statements of operations as a gain or loss on derivative instruments.  Mark-to-market gains and losses represent changes in fair values of derivative instruments that have not been settled.  The Company’s cash flow is only impacted when the actual settlements under the derivative contracts result in making or receiving a payment to or from the counterparty.  These cash settlements represent the
cumulative gains and losses on the Company’s derivative instruments for the periods presented and do not include a recovery of costs that were paid to acquire or modify the derivative instruments that were settled.

The Company has master netting agreements on individual derivative instruments with certain counterparties and therefore the current asset and liability are netted in the balance sheet and the non-current asset and liability are netted in the balance sheet for contracts with these counterparties.

Commodity Derivative Instruments

The following table presents settlements on commodity derivative instruments and unsettled gains and losses on open commodity derivative instruments for the periods presented which is recorded in the revenue section of our condensed statements of operations:

 Three Months Ended
June 30,		Six Months Ended
June 30,
(In thousands)2025202420252024
Cash Received on Settled Derivatives$60,931 $8,896 $72,993 $28,012 
Non-Cash Mark-to-Market Gain (Loss) on Derivatives67,888 (12,324)77,588 (169,972)
Gain (Loss) on Commodity Derivatives, Net$128,819 $(3,428)$150,581 $(141,959)


The following table summarizes open commodity derivative positions as of June 30, 2025, for commodity derivatives that were entered into through June 30, 2025, for the settlement periods presented:

2025202620272028
Oil:
 NYMEX WTI - Swaps:
Volume (Bbl) 5,965,805 5,313,057 — — 
Weighted Average Price ($/Bbl)$72.76 $69.08 $— $— 
NYMEX WTI - Short Swaptions(1):
Volume (Bbl) 9,156,450 22,082,400 2,196,000 — 
Weighted Average Price ($/Bbl)$72.12 $69.90 $72.51 $— 
NYMEX WTI - Long Swaptions(1):
Volume (Bbl)501,875 — — — 
Weighted Average Price ($/Bbl)$56.25 $— $— $— 
Argus WTI Midland CMA Diff - Basis Swaps:
Volume (Bbl)5,453,710 5,818,291 912,500 — 
Weighted Average Price ($/Bbl)$0.96 $1.05 $1.02 $— 
NYMEX WTI - Short Call Options(1):
Volume (Bbl)2,191,072 2,701,365 4,420,515 1,921,500 
Weighted Average Price ($/Bbl)$80.36 $73.18 $79.17 $70.14 
NYMEX WTI - Long Call Options(1):
Volume (Bbl)— 204,424 — — 
Weighted Average Price ($/Bbl)$— $67.50 $— $— 
ICE Brent - Call Options (1):
Volume (Bbl)— — — 316,590 
Weighted Average Price ($/Bbl)$— $— $— $80.00 
NYMEX WTI CMA - Collars:
Collar Put Volume (Bbl)3,609,457 6,253,092 — — 
Collar Call Volume (Bbl)4,583,505 8,988,307 — — 
Weighted Average Floor Price ($/Bbl)$69.15 $63.84 $— $— 
Weighted Average Ceiling Price ($/Bbl)$77.49 $72.31 $— $— 
Natural Gas:
NYMEX Henry Hub - Swaps:
Volume (MMBtu) 18,352,689 23,815,000 — — 
Weighted-Average Price ($/MMBtu)$4.08 $4.11 $— $— 
Waha Gas Daily - Swaps:
Volume (MMBtu)915,000 1,825,000 1,825,000 155,000 
Weighted Average Price ($/MMBtu)$3.20 $3.20 $2.98 $2.96 
NYMEX Henry Hub - Short Swaptions (1):
Volume (MMBtu) 18,250,000 23,390,000 16,470,000 — 
Weighted-Average Price ($/MMBtu) $4.40 $4.08 $3.97 $— 
NYMEX Henry Hub - Long Swaptions (1):
Volume (MMBtu)— — 7,320,000 — 
Weighted-Average Price ($/MMBtu)$— $— $4.00 $— 
Waha - Basis Swaps:
Volume (MMBtu) 11,901,000 18,250,000 3,650,000 — 
Weighted-Average Price ($/MMBtu)$0.87 $(0.84)$(0.78)$— 
Waha Gas Daily Average vs Henry Hub Last Day
Volume (MMBtu)— — 10,020,000 930,000 
Weighted Average Price ($/MMBtu)$— $— $(1.01)$(1.01)
Waha Index Swaps
Volume (MMBtu)12,061,000 18,560,000 4,890,000 — 
Weighted Average Price ($/MMBtu)$— $— $0.01 $— 
TETCO M2 - Basis Swaps:
Volume (MMBtu)10,120,000 27,375,000 930,000 — 
Weighted-Average Price ($/MMBtu)$(1.13)$(1.00)$(1.01)$— 
TCO - Basis Swaps:
Volume (MMBtu)920,000 — — — 
Weighted-Average Price ($/MMBtu)$(0.87)$— $— $— 
NYMEX Henry Hub - Short Call Options (1):
Volume (MMBtu)5,592,150 3,239,500 35,523,000 6,700,000 
Weighted-Average Price ($/MMBtu)$3.73 $6.00 $5.97 $4.50 
NYMEX Henry Hub - Collars:
Collar Put Volume (MMBtu)19,153,603 37,352,303 5,010,000 — 
Collar Call Volume (MMBtu)19,153,603 37,352,303 5,010,000 — 
Weighted-Average Floor Price ($/MMBtu)$3.14 $3.37 $3.00 $— 
Weighted-Average Ceiling Price ($/MMBtu)$4.85 $5.03 $3.86 $— 
NGL:
OPIS - Swaps:
Volume (Bbl)193,200 376,275 234,800 — 
Weighted-Average Price ($/Bbl)$36.54 $33.90 $31.19 $— 
______________
(1)Swaptions are crude oil and natural gas derivative contracts that give counterparties the option to extend certain derivative contracts for additional periods. Call Options are crude oil and natural gas derivative contracts sold by the Company that give counterparties the option to exercise certain derivative contracts. The volumes and prices reflected as Swaptions and Call Options in this table will only be effective if the options are exercised by the applicable counterparties.

Interest Rate Derivative Instruments

At times, the Company uses interest rate swaps to effectively convert a portion of its variable rate indebtedness to fixed rate indebtedness. The settlement of derivative instruments is recognized as a component of interest expense in the statements of operations. The mark-to-market component of these derivative instruments is recognized in gain (loss) on unsettled interest rate derivatives, net in the statements of operations. The following table summarizes our open interest rate derivative contracts as of June 30, 2025.

Fixed Rate Swap Agreements
Swaps
Contract PeriodNotional AmountFixed RateFloating Benchmark
October 1, 2024 - October 1, 2026$25,000,000 3.423 %USD-SOFR CME
May 1, 2025 - May 1, 2027$50,000,000 3.423 %USD-SOFR CME

Other Information Regarding Derivative Instruments

The following table sets forth the amounts, on a gross basis, and classification of the Company’s outstanding derivative financial instruments at June 30, 2025 and December 31, 2024, respectively. Certain amounts may be presented on a net basis in the condensed financial statements when such amounts are with the same counterparty and subject to a master netting arrangement.
(In thousands)
Type of CommodityBalance Sheet LocationJune 30, 2025 Estimated Fair ValueDecember 31, 2024 Estimated Fair Value
Derivative Assets:   
Commodity Price Swap ContractsCurrent Assets$89,573 $49,031 
Commodity Basis Swap ContractsCurrent Assets26,828 21,419 
Commodity Price Swaptions ContractsCurrent Assets1,611 5,398 
Commodity Price Collar ContractsCurrent Assets65,430 46,839 
Commodity Price Call Option ContractsCurrent Assets563 2,289 
Commodity Price Index Swap ContractsCurrent Assets396 — 
Interest Rate Swap ContractsCurrent Assets284 160 
Commodity Price Swap ContractsNoncurrent Assets22,398 8,710 
Commodity Basis Swap ContractsNoncurrent Assets10,400 16,513 
Commodity Price Swaptions ContractsNoncurrent Assets1,633 — 
Commodity Price Collar ContractsNoncurrent Assets27,397 35,652 
Commodity Price Call Option ContractsNoncurrent Assets912 — 
Commodity Price Index Swap ContractsNoncurrent Assets335 — 
Interest Rate Swap ContractsNoncurrent Assets— 103 
Total Derivative Assets $247,760 $186,114 
Derivative Liabilities:   
Commodity Price Swap ContractsCurrent Liabilities$(7,043)$(3,667)
Commodity Basis Swap ContractsCurrent Liabilities(3,101)(5,150)
Commodity Price Swaptions ContractsCurrent Liabilities(10,565)(44,174)
Commodity Price Collar ContractsCurrent Liabilities(28,271)(29,668)
Commodity Price Call Option ContractsCurrent Liabilities(7,571)(15,867)
Commodity Price Index Swap ContractsCurrent Liabilities(1,328)— 
Commodity Price Swap ContractsNoncurrent Liabilities(5,609)(3,852)
Commodity Basis Swap ContractsNoncurrent Liabilities(3,927)(2,564)
Commodity Price Swaptions ContractsNoncurrent Liabilities(88,235)(44,315)
Commodity Price Collar ContractsNoncurrent Liabilities(25,374)(36,327)
Commodity Price Call Option ContractsNoncurrent Liabilities(45,919)(57,693)
Commodity Price Index Swap ContractsNoncurrent Liabilities(372)— 
Interest Rate Swap ContractsNoncurrent Liabilities(164)— 
Total Derivative Liabilities $(227,479)$(243,278)

The use of derivative transactions involves the risk that the counterparties will be unable to meet the financial terms of such transactions.  When the Company has netting arrangements with its counterparties that provide for offsetting payables against receivables from separate derivative instruments these assets and liabilities are netted in the balance sheet.  The tables presented below provide a reconciliation between the gross assets and liabilities and the amounts reflected in the balance sheets.  The amounts presented exclude derivative settlement receivables and payables as of the balance sheet dates.
 Estimated Fair Value at June 30, 2025
(In thousands)Gross Amounts of
Recognized Assets (Liabilities)		Gross Amounts Offset
on the Balance Sheet		Net Amounts of Assets (Liabilities) Presented on the Balance Sheet
Offsetting of Derivative Assets: 
Current Assets$187,099 $(77,818)$109,281 
Non-Current Assets60,661 $(59,350)1,311 
Total Derivative Assets$247,760 $(137,168)$110,592 
Offsetting of Derivative Liabilities: 
Current Liabilities$(81,942)$77,818 $(4,124)
Non-Current Liabilities(145,537)59,350 (86,187)
Total Derivative Liabilities$(227,479)$137,168 $(90,311)

 Estimated Fair Value at December 31, 2024
 (In thousands)Gross Amounts of
Recognized Assets (Liabilities)		Gross Amounts Offset
on the Balance Sheet		Net Amounts of Assets (Liabilities) Presented on the Balance Sheet
Offsetting of Derivative Assets: 
Current Assets$125,137 $(78,612)$46,525 
Non-Current Assets60,977 $(51,145)9,832 
Total Derivative Assets$186,114 $(129,757)$56,357 
Offsetting of Derivative Liabilities: 
Current Liabilities$(98,527)$78,612 $(19,915)
Non-Current Liabilities(144,751)51,145 (93,606)
Total Derivative Liabilities$(243,278)$129,757 $(113,521)

All of the Company’s outstanding derivative instruments are covered by International Swap Dealers Association Master Agreements (“ISDAs”) entered into with parties that are also lenders under the Company’s Revolving Credit Facility.  The Company’s obligations under the derivative instruments are secured pursuant to the Revolving Credit Facility, and no additional collateral had been posted by the Company as of June 30, 2025.  The ISDAs may provide that as a result of certain circumstances, such as cross-defaults, a counterparty may require all outstanding derivative instruments under an ISDA to be settled immediately.  See Note 9 for the aggregate fair value of all derivative instruments at June 30, 2025 and December 31, 2024.